Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2017 | May 23, 2017 | Sep. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | VIRTUSA CORP | ||
Entity Central Index Key | 1,207,074 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 605,105,351 | ||
Entity Common Stock, Shares Outstanding | 30,119,422 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 144,908 | $ 148,986 |
Short-term investments | 72,028 | 53,917 |
Accounts receivable, net of allowance of $1,805 and $1,046 at March 31, 2017 and 2016,respectively | 135,453 | 138,530 |
Unbilled accounts receivable | 66,122 | 58,063 |
Prepaid expenses | 32,751 | 12,094 |
Restricted cash | 174 | 93,921 |
Other current assets | 28,806 | 23,268 |
Total current assets | 480,242 | 528,779 |
Property and equipment, net | 118,890 | 116,282 |
Investments accounted for using equity method | 1,708 | 2,869 |
Long-term investments | 20,057 | 28,817 |
Deferred income taxes | 23,093 | 15,890 |
Goodwill | 211,089 | 200,424 |
Intangible assets, net | 58,361 | 66,846 |
Other long-term assets | 9,980 | 20,105 |
Total assets | 923,420 | 980,012 |
Current liabilities: | ||
Accounts payable | 20,514 | 27,452 |
Accrued employee compensation and benefits | 52,582 | 53,897 |
Deferred revenue | 7,479 | 5,971 |
Accrued expenses and other | 33,251 | 42,763 |
Current portion of long-term debt | 8,870 | 8,881 |
Income taxes payable | 3,066 | 2,300 |
Total current liabilities | 125,762 | 141,264 |
Deferred income taxes | 26,682 | 16,121 |
Long-term debt, less current portion | 176,722 | 185,633 |
Long-term liabilities | 9,238 | 9,039 |
Total liabilities | 338,404 | 352,057 |
Commitments and contingencies (See Note 18) | ||
Stockholders' equity: | ||
Undesignated preferred stock, $0.01 par value; Authorized 5,000,000 shares at March 31, 2017 and 2016, respectively; Issued zero shares at March 31, 2017 and 2016, respectively | ||
Common stock, $0.01 par value; Authorized 120,000,000 shares at March 31, 2017 and 2016, respectively; Issued 31,762,214 and 31,287,074 shares at March 31, 2017 and 2016, respectively; Outstanding 29,905,511 and 29,430,371 shares at March 31, 2017 and 2016, respectively | 318 | 313 |
Treasury stock, 1,856,703 common shares, at cost, at March 31, 2017 and 2016, respectively | (9,652) | (9,652) |
Additional paid-in capital | 305,387 | 297,621 |
Retained earnings | 240,728 | 228,870 |
Accumulated other comprehensive loss | (39,749) | (42,139) |
Total Virtusa stockholders' equity | 497,032 | 475,013 |
Noncontrolling interest in subsidiaries | 87,984 | 152,942 |
Total equity | 585,016 | 627,955 |
Total liabilities, undesignated preferred stock and stockholders' equity | $ 923,420 | $ 980,012 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance (in dollars) | $ 1,805 | $ 1,046 |
Undesignated preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Undesignated preferred stock, Authorized shares | 5,000,000 | 5,000,000 |
Undesignated preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 120,000,000 | 120,000,000 |
Common stock, Issued shares | 31,762,214 | 31,287,074 |
Common stock, Outstanding shares | 29,905,511 | 29,430,371 |
Treasury stock, common shares | 1,856,703 | 1,856,703 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Income | |||
Revenue | $ 858,731 | $ 600,302 | $ 478,986 |
Costs of revenue | 620,950 | 389,310 | 304,422 |
Gross profit | 237,781 | 210,992 | 174,564 |
Operating expenses: | |||
Selling, general and administrative expenses | 219,410 | 165,672 | 121,996 |
Income from operations | 18,371 | 45,320 | 52,568 |
Other income (expense): | |||
Interest income (expense) | (3,567) | 4,777 | 5,264 |
Foreign currency transaction gains (losses) | 3,009 | 7,050 | (357) |
Other, net | 1,005 | 522 | (75) |
Total other income | 447 | 12,349 | 4,832 |
Income before income tax expense | 18,818 | 57,669 | 57,400 |
Income tax expense | 2,561 | 12,649 | 14,954 |
Net income | 16,257 | 45,020 | 42,446 |
Less: net income attributable to noncontrolling interests, net of tax | 4,399 | 218 | |
Net income attributable to Virtusa common stockholders | $ 11,858 | $ 44,802 | $ 42,446 |
Basic earnings per share (in dollars per share) | $ 0.40 | $ 1.53 | $ 1.48 |
Diluted earnings per share (in dollars per share) | $ 0.39 | $ 1.49 | $ 1.44 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 16,257 | $ 45,020 | $ 42,446 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | (3,810) | (9,324) | (12,312) |
Pension plan adjustment, net of tax effect of $(174), $15, $(12) | (276) | 47 | (354) |
Unrealized gain on available-for-sale securities, net of tax effect of $60, $13, $21 | 78 | 38 | 36 |
Unrealized gain on effective cash flow hedges, net of tax effect of $3,655, $1,800, $2,017 | 7,989 | 2,513 | 6,216 |
Other comprehensive income (loss) | 3,981 | (6,726) | (6,414) |
Comprehensive income | 20,238 | 38,294 | 36,032 |
Less: comprehensive income attributable to noncontrolling interest, net of tax | 5,990 | 1,285 | |
Comprehensive income attributable to Virtusa common stockholders | $ 14,248 | $ 37,009 | $ 36,032 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Comprehensive Income | |||
Pension plan adjustment, tax | $ (174) | $ 15 | $ (12) |
Unrealized gain on available-for-sale securities, tax | 60 | 13 | 21 |
Unrealized gain on effective cash flow hedges, tax | $ 3,655 | $ 1,800 | $ 2,017 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total Virtusa Stockholders' Equity | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated other comprehensive loss. | Non-controlling interest | Total |
Balance at Mar. 31, 2014 | $ 374,070 | $ 303 | $ (9,652) | $ 269,511 | $ 141,622 | $ (27,714) | $ 374,070 | |
Balance (in shares) at Mar. 31, 2014 | 30,263,243 | (1,856,703) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from the exercise of stock options and vesting of restricted stock | 2,740 | $ 6 | 2,734 | 2,740 | ||||
Proceeds from the exercise of stock options and vesting of restricted stock (in shares) | 591,736 | |||||||
Restricted stock awards withheld for tax | (4,857) | (4,857) | (4,857) | |||||
Share based compensation | 11,098 | 11,098 | 11,098 | |||||
Excess tax (expense) benefits from stock option exercises | 4,692 | 4,692 | 4,692 | |||||
Other comprehensive income (loss) | (6,414) | (6,414) | (6,414) | |||||
Net income | 42,446 | 42,446 | 42,446 | |||||
Balance at Mar. 31, 2015 | 423,775 | $ 309 | $ (9,652) | 283,178 | 184,068 | (34,128) | 423,775 | |
Balance (in shares) at Mar. 31, 2015 | 30,854,979 | (1,856,703) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from the exercise of stock options and vesting of restricted stock | 1,389 | $ 4 | 1,385 | 1,389 | ||||
Proceeds from the exercise of stock options and vesting of restricted stock (in shares) | 432,095 | |||||||
Proceeds from the exercise of subsidiary stock options | 1,031 | 1,031 | 1,031 | |||||
Restricted stock awards withheld for tax | (6,927) | (6,927) | (6,927) | |||||
Share based compensation | 16,108 | 16,108 | 16,108 | |||||
Subsidiary share based compensation | 71 | 71 | 71 | |||||
Excess tax (expense) benefits from stock option exercises | 2,775 | 2,775 | 2,775 | |||||
Other | $ 248 | 248 | ||||||
Acquisition of Polaris, noncontrolling interest portion, inclusive of $3,517 of foreign currency translation | 151,191 | 151,191 | ||||||
Other comprehensive income (loss) | (8,011) | (8,011) | 1,285 | (6,726) | ||||
Net income | 44,802 | 44,802 | 218 | 45,020 | ||||
Balance at Mar. 31, 2016 | 475,013 | $ 313 | $ (9,652) | 297,621 | 228,870 | (42,139) | 152,942 | $ 627,955 |
Balance (in shares) at Mar. 31, 2016 | 31,287,074 | (1,856,703) | 29,430,371 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Proceeds from the exercise of stock options and vesting of restricted stock | 1,484 | $ 5 | 1,479 | $ 1,484 | ||||
Proceeds from the exercise of stock options and vesting of restricted stock (in shares) | 475,140 | |||||||
Proceeds from the exercise of subsidiary stock options | 1,166 | 1,166 | 1,166 | |||||
Restricted stock awards withheld for tax | (6,102) | (6,102) | (6,102) | |||||
Share based compensation | 20,741 | 20,741 | 20,741 | |||||
Subsidiary share based compensation | 1,382 | 1,382 | 1,382 | |||||
Excess tax (expense) benefits from stock option exercises | (719) | (719) | (719) | |||||
Other | (50) | (50) | ||||||
Purchase of Polaris additional noncontrolling interest, net of transactions costs | (4,782) | (4,782) | (84,365) | (89,147) | ||||
Sale of Polaris stock, net of transaction costs | (5,399) | (5,399) | 12,635 | 7,236 | ||||
Noncontrolling interest purchase price adjustment | 4,348 | 4,348 | ||||||
Foreign currency translation on noncontrolling interest | (3,516) | (3,516) | ||||||
Other comprehensive income (loss) | 2,390 | 2,390 | 1,591 | 3,981 | ||||
Net income | 11,858 | 11,858 | 4,399 | 16,257 | ||||
Balance at Mar. 31, 2017 | $ 497,032 | $ 318 | $ (9,652) | $ 305,387 | $ 240,728 | $ (39,749) | $ 87,984 | $ 585,016 |
Balance (in shares) at Mar. 31, 2017 | 31,762,214 | (1,856,703) | 29,905,511 |
Consolidated Statements of Sto8
Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Thousands | 12 Months Ended |
Mar. 31, 2016USD ($) | |
Increase (Decrease) in Stockholders' Equity | |
Noncontrolling interest equity | $ 151,191 |
Foreign currency translation | |
Increase (Decrease) in Stockholders' Equity | |
Noncontrolling interest equity | $ 3,517 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 16,257 | $ 45,020 | $ 42,446 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 25,852 | 16,479 | 13,552 |
Share-based compensation expense | 22,123 | 16,179 | 11,098 |
Reversal of contingent consideration | (1,833) | ||
Provision for doubtful accounts, net | 1,015 | 208 | (134) |
(Gain) or loss on disposal of property and equipment | (434) | (41) | 127 |
Deferred income taxes, net | (10,856) | (5,398) | (2,969) |
Foreign currency transaction (gains) losses, net | (3,009) | (7,050) | 357 |
Amortization of discounts and premiums on investments | 905 | 496 | 1,242 |
Amortization of debt issuance cost | 1,129 | 109 | |
Excess tax (benefits) expense from stock option exercises | 719 | (2,775) | (4,692) |
Net change in operating assets and liabilities: | |||
Accounts receivable and unbilled receivable | (13,508) | (17,123) | (17,128) |
Prepaid expenses and other current assets | 1,009 | (7,832) | 4,497 |
Other long-term assets | 8,216 | (126) | (603) |
Accounts payable | (6,482) | (7,326) | (212) |
Accrued employee compensation and benefits | (8,305) | 1,807 | (4,385) |
Accrued expenses and other current liabilities | 1,851 | 8,734 | 4,774 |
Income taxes payable | (8,729) | 4,303 | 1,553 |
Other long-term liabilities | (5,522) | 227 | 1,227 |
Net cash provided by operating activities | 22,231 | 45,891 | 48,917 |
Cash flows from investing activities: | |||
Proceeds from sale of property and equipment | 2,631 | 90 | 160 |
Purchase of short-term investments | (112,652) | (43,586) | (14,075) |
Proceeds from sale or maturity of short-term investments | 131,116 | 115,397 | 38,696 |
Purchase of long-term investments | (35,099) | (29,618) | (33,720) |
Proceeds from sale or maturity of long-term investments | 7,116 | 9,200 | 13,612 |
Business acquisitions, net of cash acquired | (3,460) | (164,642) | (2,660) |
Decrease (increase) in restricted cash | 92,704 | (91,286) | 2,639 |
Purchase of property and equipment | (15,341) | (13,491) | (14,729) |
Net cash provided by (used in) investing activities | 67,015 | (217,936) | (10,077) |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 1,479 | 1,385 | 2,740 |
Proceeds from exercise of subsidiary stock options | 1,166 | 1,031 | |
Proceeds from debt | 200,000 | ||
Payment of debt | (10,000) | ||
Payment of debt issuance costs | (5,596) | ||
Borrowings on revolving credit facility | 20,000 | ||
Repayment of revolving credit facility | (20,000) | ||
Payment of contingent consideration related to acquisitions | (830) | (2,097) | (2,087) |
Acquisition of noncontrolling interest | (89,147) | ||
Payment of other noncontrolling interest | (50) | ||
Proceeds from subsidiary stock sale | 7,236 | ||
Principal payments on capital lease obligation | (140) | (132) | (120) |
Excess tax (expense) benefits from stock option exercises | (719) | 2,775 | 4,692 |
Net cash (used in) provided by financing activities | (91,005) | 197,366 | 5,225 |
Effect of exchange rate changes on cash and cash equivalents | (2,319) | (1,137) | (2,024) |
Net (decrease) increase in cash and cash equivalents | (4,078) | 24,184 | 42,041 |
Cash and cash equivalents, beginning of year | 148,986 | 124,802 | 82,761 |
Cash and cash equivalents, end of year | 144,908 | 148,986 | 124,802 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 7,180 | 33 | 24 |
Cash receipts from interest | 3,956 | 5,125 | 5,177 |
Cash paid for income tax | 14,314 | 17,137 | 12,696 |
Non cash investing activities | |||
Assets acquired under capital lease | $ 41 | $ 125 | $ 269 |
Nature of the Business
Nature of the Business | 12 Months Ended |
Mar. 31, 2017 | |
Nature of the Business | |
Nature of the Business | (1) Nature of the Business Virtusa Corporation (the "Company", "Virtusa", "we", "us" or "our") is a global provider of information technology ("IT") consulting and outsourcing services that accelerate business outcomes for our clients. We support Forbes Global 2000 clients across large, consumer facing industries like Banking & Financial Services, Insurance, Healthcare, Communications, and Media & Entertainment, as they look to improve their business performance through accelerating revenue growth, delivering compelling consumer experiences, improving operational efficiencies, and lowering overall IT costs. We provide services across the entire spectrum of the IT services lifecycle, from strategy & consulting, to technology & user experience ("UX") design, development of IT applications, systems integration, testing & business assurance, and maintenance and support services, including infrastructure and managed services. Our services leverage our distinctive consulting approach and unique platforming methodology to transform our clients' businesses through the innovative use of technology and domain knowledge to solve critical business problems. Our services enable our clients to accelerate business outcomes by consolidating, rationalizing and modernizing their core customer-facing processes into one or more core systems. We deliver cost-effective solutions through a global delivery model, applying advanced methods such as Agile, an industry standard technique designed to accelerate application development. We also use our consulting methodology, which we refer to as Accelerated Solution Design ("ASD"), which is a collaborative decision-making and design process performed with the client, to ensure our solutions meet the client's specifications and requirements. Our industry leading business transformational solutions combine deep domain expertise with our strengths in software engineering and business consulting to support our clients' business imperative initiatives across business growth and IT operations. Headquartered in Massachusetts, we have offices in the United States, Canada, the United Kingdom, the Netherlands, Germany, Switzerland, Sweden, Austria, the United Arab Emirates, Hong Kong, Japan, Australia and New Zealand, with global delivery centers in India, Sri Lanka, Hungary, Singapore and Malaysia, as well as near shore delivery centers in the United States. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Principles of Consolidation The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. For those majority-owned subsidiaries that are not 100% owned by the Company, the interests of the minority owners are accounted for as noncontrolling interests. The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited and Polaris Consulting & Services Limited, Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited, organized and located in Sri Lanka; Virtusa UK Limited, Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa US LLC, Virtusa Securities Corporation, a Massachusetts securities corporation, Apparatus, Inc. organized and located in Indiana, each organized and located in the United States; Virtusa International, B.V., Virtusa C.V., Virtusa Netherlands Cooperatief U.A., Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft., Polaris Consulting & Serviced, Kft., each organized and located in Hungary; Virtusa Germany GmbH, Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH, Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited, Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited Company, Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; TradeTech Consulting Scandinavia AB located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; and Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation. (b) Use of Estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Management re- evaluates these estimates on an ongoing basis. The most significant estimates relate to the recognition of revenue and profits based on the percentage of completion method of accounting for fixed-price contracts, share-based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements. (c) Foreign Currency Translation The functional currencies of the Company's non-U.S. subsidiaries are the local currency of the country in which the subsidiary operates except for Hungary, which operates in the euro and certain Netherlands entities, which operate in the U.S. dollar. Operating and capital expenditures of the Company's subsidiaries located in India, Sri Lanka, the Netherlands, Australia, Canada, Singapore, Malaysia, the Philippines, Germany, Austria, Sweden and the United Kingdom, are denominated in their local currency which is the currency most compatible with their expected economic results. India and Sri Lanka local expenditures form the underlying basis for intercompany transactions which are subsequently conducted in both U.S. dollars and U.K. pounds sterling. U.K. client sales contracts are primarily conducted in U.K. pounds sterling. All transactions and account balances are recorded in the functional currency. The Company translates the value of these non-U.S. subsidiaries' local currency denominated assets and liabilities into U.S. dollars at the rates in effect at the balance sheet date. Resulting translation adjustments are recorded in stockholders' equity as a component of accumulated other comprehensive income (loss). The local currency denominated statement of income amounts are translated into U.S. dollars using the average exchange rates in effect during the period. Realized foreign currency transaction gains and losses are included in the consolidated statements of income. The Company's non-U.S. subsidiaries do not operate in "highly inflationary" countries. (d) Derivative Instruments and Hedging Activities The Company enters into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies. The Company also enters into interest rate swaps to mitigate interest rate risk on the Company's variable rate debt. The Company designates derivative contracts as cash flow hedges if they satisfy the criteria for hedge accounting. Changes in fair values of derivatives designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income, net of taxes, until the hedged transactions occur and are then recognized in the consolidated statements of income. Changes in fair value of derivatives not designated as hedging instruments and the ineffective portion of derivatives designated as cash flow hedges are recognized immediately in the consolidated statements of income. With respect to derivatives designated as cash flow hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative will be highly effective in offsetting changes in fair values or cash flows of the hedged item. If the Company determines that a derivative or a portion thereof is not highly effective as a hedge, or if a derivative ceases to qualify for hedge accounting, the Company prospectively discontinues hedge accounting with respect to that derivative. (e) Cash and Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an initial maturity of three months or less from the date of purchase to be cash equivalents. At March 31, 2017, cash equivalents consisted of money market instruments and certificates of deposit. The Company had short-term and long-term restricted cash totaling $178 and $93,940 at March 31, 2017 and 2016, respectively. Restricted cash includes escrow deposits related to acquisitions, restricted deposits with banks to secure the import of computer and other equipment and bank guarantees associated with the purchase of property and equipment of the Company's facilities in India. Restricted cash at March 31, 2016 also includes escrow deposits related to the mandatory offering for 26% of the outstanding shares of Polaris as required under India takeover rules, which was released subsequently on April 6, 2016. (f) Investment Securities The Company classifies all debt securities as "available for sale". These securities are classified as short-term investments and long-term investments on the consolidated balance sheet based on their maturity dates and are carried at fair market value. Any unrealized gains and losses on available for sale securities are reported in accumulated other comprehensive income, net of tax, as a separate component of stockholders' equity unless the decline in value is deemed to be other-than-temporary, in which case, investments are written down to fair value and the loss is charged to the consolidated statement of income. Any realized gains and losses on trading securities are charged to the consolidated statement of income. The Company determines the cost of the securities sold based on the specific identification method. The Company conducts a periodic review and evaluation of its investment securities to determine if the decline in fair value of any security is deemed to be other-than-temporary. Other-than-temporary impairment losses are recognized on securities when: (i) the holder has an intention to sell the security; (ii) it is more likely than not that the security will be required to be sold prior to recovery; or (iii) the holder does not expect to recover the entire amortized cost basis of the security. Other-than- temporary losses are reflected in earnings as a charge against gain on sale of investments to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The Company has no intention to sell any securities in an unrealized loss position at March 31, 2017 nor is it more likely than not that the Company would be required to sell such securities prior to the recovery of the unrealized losses. At March 31, 2017, the Company believes that all impairments of investment securities are temporary in nature. (g) Goodwill and Other Intangible Assets The Company accounts for its business combinations under the acquisition method of accounting. The Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price for acquisitions over the fair value of the net assets acquired, including other intangible assets, is recorded as goodwill. Goodwill is not amortized but is tested for impairment at the reporting unit level, defined as the Company level, at least annually in the fourth quarter of each fiscal year or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is not more likely than not that fair value of a reporting unit is less than its carrying amount. If this is the case, then performing the quantitative two-step goodwill impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any or all of its reporting units, and proceed directly to the use of the two-step impairment test. The two-step process begins with an estimation of the fair value of a reporting unit. Goodwill impairment exists when a reporting unit's carrying value of goodwill exceeds its implied fair value. Significant judgment is applied when goodwill is assessed for impairment. For the Company's goodwill impairment analysis, the Company operates under one reporting unit. Any impairment would be measured based upon the fair value of the related assets. In performing the first step of the goodwill impairment testing and measurement process, the Company compares its entity-wide estimated fair value to net book value to identify potential impairment. Management estimates the entity-wide fair value utilizing the Company's market capitalization, plus an appropriate control premium. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the market price of the Company's common stock. If the fair value of the reporting unit is less than the book value, the second step is performed to determine if goodwill is impaired. If the Company determines through the impairment evaluation process that goodwill has been impaired, an impairment charge would be recorded in the consolidated statement of income. The Company completed the annual impairment test required during the fourth quarter of the fiscal year ended March 31, 2017 and determined that there was no impairment. The Company continues to closely monitor its market capitalization. If the Company's market capitalization, plus an estimated control premium, is below its carrying value for a period considered to be other-than-temporary, it is possible that the Company may be required to record an impairment of goodwill either as a result of the annual assessment that the Company conducts in the fourth quarter of each fiscal year, or in a future quarter if an indication of potential impairment is evident. The estimated fair value of the reporting unit on the assessment date significantly exceeded the carrying book value. Other intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods appropriate for the type of intangible asset and reported separately from goodwill. Intangible assets with definite lives are amortized over the estimated useful lives and are tested for impairment when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. The Company tests other intangible assets with definite lives for impairment by comparing the carrying amount to the sum of the net undiscounted cash flows expected to be generated by the asset whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds its net undiscounted cash flows, then an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value. (h) Fair Value of Financial Instruments At March 31, 2017 and 2016, the carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, accounts receivable, unbilled accounts receivable, restricted cash, accounts payable, accrued employee compensation and benefits, other accrued expenses and long-term debt, approximate their fair values due to the nature of the items. See note 8 to the consolidated financial statements for a discussion of the fair value of the Company's other financial instruments. (i) Concentration of Credit Risk and Significant Customers Financial instruments which potentially expose the Company to concentrations of credit risk are primarily comprised of cash and cash equivalents, investments, derivatives, accounts receivable and unbilled accounts receivable. The Company places its cash, investments and derivatives in highly-rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non-performance by the counterparties and, accordingly, does not require collateral. At March 31, 2017 and 2016, one client accounted for 11% and 12% respectively, of gross accounts receivable. Revenue from significant clients as a percentage of the Company's consolidated revenue was as follows: Year Ended 2017 2016 2015 Customer A % % % Customer B % % % (j) Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of their lease term or the estimated useful life of the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repair and maintenance costs are expensed as incurred. (k) Long-Lived Assets The Company reviews the carrying value of its long-lived assets or asset groups with definite useful lives to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying value of an asset to the future net undiscounted cash flows directly associated with the asset. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value exceeds the fair value of the asset. The Company uses a discounted cash flow approach or other methods, if appropriate, to assess fair value. Long-lived assets to be disposed of by sale are reported at the lower of carrying value or fair value less cost to sell and depreciation is ceased. Long-lived assets to be disposed of other than by sale are considered to be held and used until disposal. (l) Internally-Developed Software The Company capitalizes costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation and testing. Costs incurred during the preliminary project stage, along with post-implementation stages of internal use computer software, are expensed as incurred. Capitalized development costs are typically amortized over the estimated life of the software, typically three to ten years, using the straight line method, beginning with the date that an asset is ready for its intended use. At March 31, 2017 and 2016, capitalized software development costs, which include software development work in progress, were approximately $9,658 and $8,020, respectively. These costs were recorded in property and equipment. For the fiscal years ended March 31, 2017, 2016 and 2015, amortization of capitalized software development costs amounted to approximately $1,702, $556 and $706, respectively. (m) Income Taxes Income taxes are accounted for using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Changes to enacted tax rates would result in either increases or decreases in the provision for income taxes in the period of changes. The Company evaluates the realizability of deferred tax assets and recognizes a valuation allowance when it is more likely than not that all, or a portion of, deferred tax assets will not be realized. The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in multiple jurisdictions. The Company records liabilities for estimated tax obligations in the United States and other tax jurisdictions in which it has operations (see note 13 to the consolidated financial statements). The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions. The Company's policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. (n) Revenue Recognition The Company derives its revenue from a variety of IT consulting, technology implementation and application outsourcing services. Contracts for these services have different terms and conditions based on the scope, deliverables, and complexity of the engagement which require management to make judgments and estimates in determining the overall cost to the customer. Fees for these contracts may be in the form of time and materials or fixed price arrangements. Revenue is recognized as work is performed and amounts are earned. The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. Volume discounts are recorded as a reduction of revenue over the contractual period as services are performed. Revenue on time and material contracts is recognized as the services are performed and amounts are earned. Revenue from fixed price contracts related to complex design, development and customization is accounted for under the percentage of completion method. Under the percentage of completion method, management estimates the percentage of completion based upon efforts incurred as a percentage of the total estimated efforts for the specified engagement. When total cost estimates exceed revenue, the Company accrues for the estimated losses immediately. The use of the percentage of completion method requires significant judgment relative to estimating total contract revenue and efforts, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in other engagement related costs. The Company's analysis of these contracts also contemplates whether contracts should be combined or segmented. The Company combines closely related contracts when all the applicable criteria under U.S. GAAP are met. Similarly, the Company may segment a project, which may consist of a single contract or a group of contracts, with varying rates of profitability, only if all the applicable criteria under U.S. GAAP are met. Estimates of total contract revenue and efforts are continuously monitored during the term of the contract and are subject to revision as the contract progresses. When revisions in estimated contract revenue and efforts are determined, such adjustments are recorded in the period in which they are first identified. Revenue from fixed-price contracts related to consulting or other IT services is accounted for using a proportional performance method. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts to the completion of the contract. The cumulative impact of any change in estimates of the contract revenue is reflected in the period in which the changes become known. Revenue from fixed-price applications management, maintenance or support engagements is recognized as earned which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagement. The Company may enter into arrangements that consist of multiple elements and in these types of arrangements the transaction price is allocated to the individual units of accounting at the inception of the arrangement based on the relative selling price. The Company uses a hierarchy to determine the selling prices to be used for allocating revenue: (i) vendor-specific objective, evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE), and (iii) best estimate of the selling price (ESP). The Company may enter into hosting arrangements where revenue is recognized as the service is delivered, generally on a straight-line basis, over the contractual period of performance. In these types of arrangements the Company considers the rights provided to the customer in determining whether the arrangement includes the sale of a software license. Differences between the timing of billings and the recognition of revenue based on various methods of accounting are recorded as unbilled revenue or deferred revenue. Revenue includes reimbursements of travel and out-of-pocket expenses, with equivalent amounts of expense recorded in costs of revenue, of $12,920, $14,142 and $10,877 for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. Any tax assessed by a governmental authority that is incurred as a result of a revenue transaction (e.g. sales tax) is excluded from revenue and reported on a net basis. (o) Costs of Revenue and Operating Expenses Costs of revenue consist principally of salaries, employee benefits and stock compensation expense, reimbursable and non-reimbursable travel costs, subcontractor fees, and immigration related expenses for IT professionals. Selling and marketing expenses are charged to operating expenses as incurred. Selling and marketing expenses are those expenses associated with promoting and selling the Company's services and include such items as sales and marketing personnel salaries, stock compensation expense and related fringe benefits, commissions, travel, and the cost of advertising and other promotional activities. Advertising and promotional expenses incurred were approximately $560, $316 and $430 for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. General and administrative expenses include other operating items such as officers' and administrative personnel salaries, stock compensation expense and related fringe benefits, legal and audit expenses, public company related expenses, insurance, facility costs, provision for doubtful accounts, depreciation and amortization, including amortization of purchased intangibles and operating lease expenses. (p) Share-Based Compensation Share-based compensation cost is determined by estimating the fair value at the grant date of the Company's common stock using the Black-Scholes option pricing model, and expensing the total compensation cost on a straight line basis (net of estimated forfeitures) over the requisite employee service period. The allocation of total share-based compensation expense between costs of revenue and selling, general and administrative expenses was as follows: Year Ended March 31, 2017 2016 2015 Costs of revenue $ $ $ Selling, general and administrative expenses Total share-based compensation expense $ $ $ The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing valuation model with the following assumptions: Year Ended March 31, Weighted Average Fair Value Options Pricing Model Assumptions 2017(1) 2016(1) 2015 Risk-free interest rate — — % Expected term (in years) — — Anticipated common stock volatility — — % Expected dividend yield — — % (1) There were no options granted during the fiscal years ended March 31, 2017 and 2016. The risk-free interest rate assumptions are based on the interpolation of various U.S. Treasury bill rates in effect during the month in which stock option awards are granted. For the fiscal year ended March 31, 2015, the Company's volatility assumption is based on the historical volatility rates of the Company's common stock from exchange traded shares over periods commensurate with the expected term of each grant The expected term of employee share-based awards represents the weighted average period of time that awards are expected to remain outstanding. The determination of the expected term of share-based awards assumes that employees' behavior is a function of the awards vested, contractual lives, and the extent to which the award is in the money. Accordingly, for the fiscal year ended 2015, the expected term of our options is based on historical employee exercise patterns. The fair value of restricted awards and deferred stock awards is determined based on the number of stock awards granted and the quoted price of our stock at date of grant. As of March 31, 2017, there was $27,483 of total unrecognized compensation cost related to unvested stock options, restricted stock awards, deferred stock awards and restricted stock units granted under the Company's Amended and Restated 2000 Option Plan, the Company's 2007 Stock Option and Incentive Plan and the Company's 2015 Stock Option and Incentive Plan (see note 12 for a more complete description of these plans). The unrecognized compensation cost is expected to be recognized over a remaining weighted average period of 2.14 years. (q) Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to make required payments. The allowance for doubtful accounts is determined by evaluating the relative credit worthiness of each client, historical collections experience and other information, including the aging of the receivables. We evaluate the collectability of our accounts receivables on an on-going basis and write-off accounts when they are deemed to be uncollectible. (r) Unbilled Accounts Receivable Unbilled accounts receivable represent revenue earned on contracts to be billed, in subsequent periods, as per the terms of the related contracts. (s) Recent accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in process of reviewing existing revenue contracts and related costs for evaluating the recognition of revenue from contracts with customers as well as commission and fulfillment costs that may require capitalization and amortization. The Company is also in process of identifying and implementing changes to our processes to meet the reporting and disclosure requirements. The Company expects the new standard could change the amount and timing of revenue and costs under certain arrangements types. The Company has not yet determined what impact the new guidance will have on its consolidated financial statements and related disclosures or concluded on the transition method. In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. The Company is currently evaluating the effect the new standard will have on the Company's consolidated financial statements and related disclosures. In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard repl |
Earnings per Share
Earnings per Share | 12 Months Ended |
Mar. 31, 2017 | |
Earnings per Share | |
Earnings per Share | (3) Earnings per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed by including the dilutive impact of common stock equivalents outstanding for the period in the denominator. Common stock equivalents include shares issuable upon the exercise of outstanding stock options, stock appreciation rights ("SARs"), issuance of shares on exercise or vesting of restricted stock units, unvested restricted stock, net of shares assumed to have been purchased with the proceeds, using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share for the periods set forth below: Year Ended March 31, 2017 2016 2015 Numerators: Net income available to Virtusa common stockholders $ $ $ Denominators: Weighted average common shares outstanding Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units Dilutive effect of stock appreciation rights Weighted average shares—diluted Basic earnings per share $ $ $ Diluted earnings per share $ $ $ During the fiscal years ended March 31, 2017, 2016, and 2015, unvested restricted stock awards and unvested restricted stock units issuable for, and options to purchase, 378,627, 68,991 and 21,629 shares of common stock in the aggregate for such fiscal years, respectively, were excluded from the calculations of diluted earnings per share as their effect would have been anti-dilutive. On May 3, 2017, the Company entered into an investment agreement with The Orogen Group ("Orogen") pursuant to which, Orogen purchased 108,000 shares of the Company's newly issued convertible preferred stock, initially convertible into 3,000,000 shares of common stock, for an aggregate purchase price of $108,000 with an initial conversion price of $36.00. See Note 22 to the consolidated financial statements included herein for a detailed description. |
Acquisitions
Acquisitions | 12 Months Ended |
Mar. 31, 2017 | |
Acquisitions | |
Acquisitions | (4) Acquisitions On March 3, 2016, pursuant to a share purchase agreement (the "SPA"), dated as of November 5, 2015, by and among Virtusa Consulting Services Private Limited ("Virtusa India"), a subsidiary of the Company, Polaris Consulting & Services Limited ("Polaris") and the Promoter Sellers named therein, as amended, the Company completed the purchase of 53,133,127 shares, or approximately 51.7% of the fully-diluted capitalization of Polaris from certain Polaris shareholders for approximately $168,257 (Indian rupees 11,391,365) in cash (the "Polaris SPA Transaction"). In addition, on April 6, 2016, Virtusa India completed an unconditional mandatory open offer with successful tender to purchase an additional 26% of the fully diluted outstanding shares of Polaris common stock from Polaris' public shareholders. The mandatory open offer was conducted in accordance with requirements of the Securities and Exchange Board of India ("SEBI") and the applicable Indian rules on takeovers. Virtusa India purchased 26,719,942 shares of Polaris common stock for an aggregate purchase price of approximately $89,147 (Indian rupees 5,935,260). Pursuant to the mandatory open offer, during the fiscal year ended March 31, 2016, the Company transferred $89,220 into an escrow account in accordance with the India takeover rules, which is recorded as restricted cash at March 31, 2016, and the mandatory open offer closed on April 6, 2016. On April 6, 2016, the restricted cash was released from the escrow account and used for settlement for the mandatory open offer. Upon the closing of the mandatory offering, Virtusa's ownership interest in Polaris increased from approximately 51.7% to 77.7% of Polaris' fully diluted shares of common stock outstanding, and from approximately 52.9% to 78.8% of Polaris' basic shares of common stock outstanding. Under applicable Indian rules on takeovers, Virtusa India was required to sell within one year of the settlement of the unconditional mandatory offer its shares of common stock in Polaris in excess of 75% of the basic outstanding shares of common stock of Polaris. In order to comply with the applicable Indian rules on takeovers, during the three months ended December 31, 2016, the Company sold 3.7% of its shares of Polaris common stock through a public offering. The sale offer closed on December 14, 2016, and the Company received approximately $7,645 in proceeds, net of $188 in brokerage fees and taxes. In addition to these costs, the Company incurred additional costs of $409 towards professional and legal fees and expense. The Company's ownership interest in Polaris prior to the sale offer was 78.6% of the outstanding shares of common stock, and upon the closing of the sale offer, the Company's ownership interest decreased from 78.6% to 74.9% of Polaris' basic shares of common stock outstanding. In accordance with ASC 810-10, changes in a parent's ownership, while retaining its financial controlling interest, are accounted for as equity transactions. Under the purchase method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair values. The Company may continue to adjust the preliminary estimated fair values after obtaining more information regarding asset valuations, liabilities assumed, and revision of preliminary estimates. During the three months ended March 31, 2017, the Company completed its fair values determination during the one year measurement period. During the year ended March 31, 2017, the Company recorded $4,353 and $9,299 to goodwill related to noncontrolling interest and deferred tax liabilities respectively; and $4,625 and $316 as a reduction of goodwill related to fair value adjustment related to certain assets and certain accruals respectively. During the year ended March 31, 2017, the impact to the consolidated statements of income was not material. A summary of the fair values for Polaris is as follows: Amount Useful Life Consideration Transferred: Cash paid at closing Less: Cash acquired ) Total purchase price, net of cash acquired Purchase Price Allocation: Cash and cash equivalents Accounts receivable and unbilled receivable Short term investments Other current assets Property and equipment Long term investments Long term assets Goodwill Customer relationships 10 - 15 years Trademark 2 years Accounts Payable ) Deferred revenue ) Accrued expenses and other current liabilities ) Deferred income taxes ) Long term liabilities ) Noncontrolling interest ) Total purchase price Acquisition-related costs Acquisition costs are recorded in selling, general and administrative expenses. Noncontrolling interest for the minority shares outstanding was recorded at fair value, based on the Polaris common stock closing stock price on the date of acquisition and the fair value of vested Polaris stock options exercisable for Polaris common stock were valued based on the Black-Scholes option pricing model. The assets of Polaris acquired, and liabilities assumed by the Company, include net assets of $300 related to a business unit that was sold to a third party on July 8, 2016. To finance the Polaris SPA Transaction, on February 25, 2016, the Company drew down the full $200,000 of the term loan. See Note 11 to the consolidated financial statements included herein for a detail description of our debt. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (5) Goodwill and Intangible Assets Goodwill: The Company has one reportable segment at March 31, 2017. The following are details of the changes in goodwill balance at March 31, 2017: Amount Balance at April 1, 2016 $ Purchase price adjustments Foreign currency translation adjustments Balance at March 31, 2017 $ The acquisition costs and goodwill balance deductible for our business acquisitions for tax purposes are $74,082. The acquisition costs and goodwill balance not deductible for tax purposes are $148,984 and relate to the Company's TradeTech acquisition (closed on January 2, 2014) and the Polaris acquisition. The Company performed the annual assessment of its goodwill during the fourth quarter of the fiscal year ended March 31, 2017 and determined that the estimated fair value of the Company's reporting unit exceeded its carrying value and therefore goodwill was not impaired. The Company will continue to complete goodwill impairment assessments at least annually during the fourth quarter of each ensuing fiscal year. The Company will continue to evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets, including intangible assets, may warrant revision or that the carrying value of these assets may be impaired. Any write downs are treated as permanent reductions in the carrying amount of the assets. Intangible Assets: The following are details of the Company's intangible asset carrying amounts acquired and amortization for the fiscal year ended March 31, 2017 and March 31, 2016: March 31, 2017 Weighted Gross Accumulated Net Amortizable intangible assets: Customer relationships $ $ $ Trademark Technology $ $ $ March 31, 2016 Weighted Gross Accumulated Net Amortizable intangible assets: Customer relationships $ $ $ Partner relationships — Trademark Backlog $ $ $ The Company's amortization expense related to intangible assets acquired through acquisitions was $9,523, $5,491 and $4,436 for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. The components included in the gross carrying amounts of amortization expense in the table above reflect the Company's acquisition of all the outstanding stock of Insource Holdings, Inc. and its subsidiaries on November 4, 2009, the Company's purchase of substantially all of the assets of ConVista Consulting LLC, on February 1, 2010, the Company's purchase of substantially all of the assets of ALaS Consulting LLC, on July 1, 2011, the Company's purchase of substantially all of the assets of OSB on November 1, 2013, the Company's acquisition of all the outstanding stock of TradeTech on January 2, 2014, the Company's acquisition of all the outstanding stock of Apparatus, Inc. ("Apparatus") an Indiana corporation on April 1, 2015, the Company's acquisition of Agora's business on July 28, 2015 and the Company's acquisition of a majority interest in Polaris on March 3, 2016. The intangible assets are being amortized on either a straight-line basis or using the most appropriate economic pattern of consumption over their estimated useful lives. The estimated amortization expense related to the purchased intangible assets listed in the table above at March 31, 2017 is as follows for the following fiscal years: Fiscal year Amount 2018 $ 2019 2020 2021 2022 Thereafter Total $ |
Investment Securities
Investment Securities | 12 Months Ended |
Mar. 31, 2017 | |
Investment Securities | |
Investment Securities | (6) Investment Securities At March 31, 2017 and 2016, all of the Company's investment securities were classified as available-for-sale and were carried on its balance sheet at their fair market value. A fair market value hierarchy based on three levels of inputs was used to measure each security (see note 8 to the consolidated financial statements). The following is a summary of investment securities at March 31, 2017: Amortized Gross Gross Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current ) Preference shares: Current — ) Non-current — ) Agency and short-term notes: Current — ) Non-current — ) Mutual funds: Current — Commercial paper: Current — — Equity Shares/ Options: Non-current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ The following is a summary of investment securities at March 31, 2016: Amortized Gross Gross Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current ) Preference shares: Non-current — — Agency and short-term notes: Current — Non-current ) Mutual funds: Current ) Depository receipts: Current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses on its available-for-sale securities at March 31, 2017 are temporary. The Company conducts a periodic review and evaluation of its investment securities to determine if the decline in fair value of any security is deemed to be other-than-temporary. Other-than-temporary losses are reflected in earnings as a charge against gain on sale of investments to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The following tables show the gross unrealized losses and fair value of the Company's investment securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2017 and March 31, 2016: Less Than 12 Months Fair Value Gross Available-for-sale securities at March 31, 2017: Corporate bonds $ $ ) Agency bonds ) Preference shares ) Total $ $ ) Available-for-sale securities at March 31, 2016: Corporate bonds $ $ ) Agency bonds ) Mutual funds ) Total $ $ ) Greater Than 12 Months Fair Value Gross Available-for-sale securities at March 31, 2017: Corporate bonds $ — $ — Total $ — $ — Available-for-sale securities at March 31, 2016: Corporate bonds $ ) Total $ $ ) At March 31, 2017, there were no investment securities owned by the Company for which the fair value was less than the carrying value for a period greater than 12 months. Available-for-sale securities by contractual maturity were as follows: March 31, Due in one year or less $ Due after 1 year through 5 years Due after 5 years — Total $ Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows: Year Ended March 31, 2017 2016 2015 Proceeds from sales of available-for-sale investment securities $ $ $ Gross gains $ $ $ Gross losses ) — ) Net realized gains on sales of available-for-sale investment securities $ $ $ During the fiscal years ended March 31, 2017, 2016 and 2015, the Company has recorded interest income of $11,060, $5,420 and $5,264, respectively. |
Investments in unconsolidated A
Investments in unconsolidated Affiliates | 12 Months Ended |
Mar. 31, 2017 | |
Investments in unconsolidated Affiliates | |
Investments in unconsolidated Affiliates | (7) Investments in unconsolidated Affiliates Investments in entities in which the Company owns between 20% and 50% of the voting interest or otherwise acquires management influence are accounted for using the equity method and initially recognized at cost. Under the equity method, the Company's share of the post-acquisition profits and losses is recognized in the Consolidated Statements of Income. As of March 31, 2017, through its Polaris subsidiary, the Company owns a 50% interest in Intellect Polaris Design LLC, an LLC which holds certain real estate in New Jersey, which is being accounted for using the equity method of accounting. As of March 31, 2017, the difference between the carrying amount and our equity in net assets of this investment was $516. This is due to fair value measurement of the investment upon the Polaris acquisition. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Mar. 31, 2017 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (8) Fair Value of Financial Instruments The Company uses a framework for measuring fair value under U.S. generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company's financial assets and liabilities reflected in the consolidated financial statements at carrying value include marketable securities and other financial instruments which approximate fair value. Fair value for marketable securities is determined using a market approach based on quoted market prices at period end in active markets. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. An entity is allowed to elect to record financial assets and financial liabilities at fair value upon their initial recognition on a contract- by- contract basis. The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis at March 31, 2017 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ — $ Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Interest Rate Swap Contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — — $ — — Interest Rate Swap Contracts — — — — Total liabilities $ — $ — $ — $ — The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ — $ Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — $ $ — $ Contingent consideration — — Total liabilities $ — $ $ $ The Company determines the fair value of the contingent consideration related to the Company's acquisitions of Apparatus based on the probability of attaining certain revenue and profit margin targets using an appropriate discount rate to present value the liability. The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as at March 31, 2017. Level 3 Balance at April 1, 2016 $ Contingent consideration recognized in earnings Payment of contingent consideration ) Balance at March 31, 2017 $ — |
Property and Equipment
Property and Equipment | 12 Months Ended |
Mar. 31, 2017 | |
Property and Equipment | |
Property and Equipment | (9) Property and Equipment Property and equipment and their estimated useful lives in years consist of the following: March 31, Estimated Useful 2017 2016 Computer and other equipment 3 - 6 $ $ Furniture and fixtures 7 - 10 Vehicles 3 - 8 Software 3 - 10 Leasehold improvements Lesser of estimated useful life or lease term Buildings 15 - 30 Land Capital work-in-progress $ $ Less—accumulated depreciation and amortization Property and equipment, net $ $ Depreciation and amortization expense for the fiscal years ended March 31, 2017, 2016 and 2015 was $16,329, $10,988 and $9,116, respectively. Capital work-in-progress represents advances paid towards the acquisition of property and equipment, and the cost of property and equipment including internally developed software not placed in service before the balance sheet date. The cost and accumulated amortization of assets under capital leases at March 31, 2017 were $384 and $218, respectively. The cost and accumulated amortization of assets under capital leases at March 31, 2016 were $474 and $209, respectively. |
Accrued Expenses and Other
Accrued Expenses and Other | 12 Months Ended |
Mar. 31, 2017 | |
Accrued Expenses and Other | |
Accrued Expenses and Other | (10) Accrued Expenses and Other Accrued expenses and other consists of the following: March 31, March 31, Accrued other taxes $ $ Accrued professional fees Acquisition related liabilities — Hedge liability — Accrued discounts Accrued employee travel and other expense Accrued other Total $ $ |
Debt
Debt | 12 Months Ended |
Mar. 31, 2017 | |
Debt | |
Debt | (11) Debt On February 25, 2016, in connection with the Polaris SPA Transaction, the Company entered into a credit agreement (the "Credit Agreement") dated as of February 25, 2016, by and among the Company, its guarantor subsidiaries party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement replaces the Company's existing $25,000 credit agreement with JP Morgan Chase Bank, N.A. and provides for a $100,000 revolving credit facility and a $200,000 delayed-draw term loan (together, the "Credit Facility"). To finance the Polaris SPA Transaction, on February 25, 2016, the Company drew down the full $200,000 of the term loan. Interest under these facilities accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company's ratio of debt to adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense ("EBITDA"). The Company is required under the terms of the Credit Agreement to make quarterly principle payments on the term loan. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years ending February 24, 2021. At March 31, 2017, the interest rate on the Credit Facility was 3.74% and there were no borrowings under the revolving credit facility. During the fiscal year ended March 31, 2017, the Company recognized $7,493 in interest expense and amortization of debt issuance cost. The Credit Agreement has financial covenants that require that the Company maintain a Total Leverage Ratio, commencing on June 30, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Facility, of not more than 3.00 to 1.00 for the second year of the Credit Facility, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter (the "Reference Period"). In addition, for a period, expected to be at least one year from the completion of the Company's closing of the Polaris SPA Transaction, until the occurrence of certain events described in the Credit Agreement, at any time when the Total Leverage Ratio exceeds 1.50 to 1.00 as of the last day of a quarter, the Company must maintain at least $30,000 in unrestricted cash, cash equivalents and certain permitted investments under the Credit Facility held in bank deposits in the U.S., and $20,000 in unrestricted cash and certain permitted investments under the Credit Facility and long-term securities investments held in accordance with the Company's current investment policy. The financial covenants also require that the Company maintain a Fixed Charge Coverage Ratio, commencing on June 30, 2016, of not less than 1.25 to 1.00, as of the last day of any Reference Period. For purposes of these covenants, "Total Leverage Ratio" means, as of the last day of any fiscal quarter, the ratio of Funded Debt to Adjusted EBITDA for the reference period ended on such date. "Funded Debt" refers generally to total indebtedness to third-parties for borrowed money, capital leases, deferred purchase price and earn-out obligations and related guarantees and "Adjusted EBITDA" is defined as consolidated net income plus (a) (i) GAAP depreciation and amortization, (ii) non-cash equity-based compensation expenses, (iii) fees and expenses incurred during such period in connection with the Credit Facility and loans made thereunder, (iv) fees and expenses incurred during such period in connection with any permitted acquisition, (v) one-time regulatory charges, (vi) other extraordinary and non-recurring losses or expenses, and (vii) all other non-cash charges, expenses and losses for such period, minus (b) (i) extraordinary or non-recurring income or gains for such period, and (ii) any cash payments made during such period in respect of non-cash charges, expenses or losses described in clauses (a)(ii), (a)(v) and (a)(vi) above taken in a prior period, subject to other adjustments and certain caps and limits on adjustments. The Fixed Charge Coverage Ratio is calculated under the Credit Agreement generally as the ratio of Adjusted EBITDA, excluding capital expenditures made during such period (to the extent not financed with indebtedness (other than Revolving Loans), an issuance of equity interests or capital contributions, or proceeds of asset sales, the proceeds of casualty insurance used to replace or restore assets), to fixed charges (regularly scheduled consolidated interest expense paid in cash, regularly scheduled amortization payments on indebtedness in cash, income taxes paid in cash and the interest component of capital lease obligation payments), on a consolidated basis. The Credit Facility is secured by substantially all of the Company's assets, including all intellectual property and all securities in domestic subsidiaries (other than certain domestic subsidiaries where the material assets of such subsidiaries are equity in foreign subsidiaries), subject to customary exceptions and exclusions from the collateral. All obligations under the Credit Agreement are unconditionally guaranteed by substantially all of the Company's material direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of the guarantors, with certain exclusions. As of March 31, 2017, we are in compliance with our debt covenants and have provided a quarterly certification to our lenders to that effect. We believe that we currently meet all conditions set forth in the Credit Agreement to borrow thereunder and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility as of March 31, 2017 and through the date of this filing. Current portion of long-term debt The following summarizes our short-term debt balance as of: March 31, 2017 2016 Notes outstanding under the revolving credit facility $ — $ — Term loan- current maturities Less: deferred financing costs, current ) ) Total $ $ Long-term debt, less current portion The following summarizes our long-term debt balance as of: March 31, 2017 2016 Term loan $ $ Less: Current maturities ) ) Deferred financing costs, long-term ) ) Total $ $ In accordance with the recently adopted FASB ASU 2015-03, the Company has presented debt issuance costs in the balance sheet as a direct deduction from the carrying value of that debt liability. The following represents the schedule of maturities of long-term debt: Fiscal year ending March 31: 2018 $ 2019 2020 2021 Total $ Convertible preferred stock issuance On May 3, 2017, the Company entered into an investment agreement with The Orogen Group ("Orogen") pursuant to which, Orogen purchased 108,000 shares of the Company's newly issued convertible preferred stock, initially convertible into 3,000,000 shares of common stock, for an aggregate purchase price of $108,000 with an initial conversion price of $36.00. On May 3, 2017, in connection with the Orogen Preferred Stock Financing, the Company amended its Credit Agreement primarily to issue the convertible preferred stock and pay certain dividends with respect to the convertible preferred stock and the Company repaid principle payment of $81,000 of its term loan. As a result of this pre-payment the Company has no additional obligated principal payments until the amount due at maturity. Interest payments will continue per the terms of the Credit Agreement. On July 26, 2016, the Company entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016, the Company entered into a third 12-month forward starting interest rate swap transaction to mitigate the Company's interest rate risk on Company's variable rate debt (collectively, "The Interest Rate Swap Agreements"). The Company's objective is to limit the variability of cash flows associated with changes in LIBOR interest rate payments due on the Credit Agreement by using pay-fixed, receive-variable interest rate swaps to offset the future variable rate interest payments. The Company will recognize these transactions in accordance with ASC 815 "Derivatives and Hedging," and have designated the swaps as cash flow hedges. The three Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and with the pre-payment of $81,000 of principal on our existing debt, hedge approximately 86% of our forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods corresponding to the quarterly principle payments on the term loan. The Interest Rate Swap Agreements require the Company to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts. The unrealized gain associated with the 2015 Swap Agreement was $1,842 at March 31, 2017, which represents the estimated amount that the Company would receive from the counterparties in the event of an early termination. Beginning in fiscal 2009, the Company's U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse or continuing involvement, certain of its European-based accounts receivable balances from one client to such third party financial institution. During the course of the fiscal year ended March 31, 2017, $22,741 of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this agreement were immaterial during the fiscal year ended March 31, 2017. No amounts were due as of March 31, 2017, but the Company may elect to use this program again in future periods. However, the Company cannot provide any assurances that this or any other financing facilities will be available or utilized in the future. |
Stock Options, Restricted Stock
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | 12 Months Ended |
Mar. 31, 2017 | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | (12) Stock Options, Restricted Stock Awards and Stock Appreciation Rights The Company's Amended and Restated 2000 Stock Option Plan (the "2000 Plan") was adopted in the fiscal year ended March 31, 2001. Under the 2000 Plan, shares were reserved for issuance to the Company's employees, directors, and consultants. As of March 31, 2017, there were no shares reserved for issuance under this plan. Options granted under the 2000 Plan may be incentive stock options, nonqualified stock options or restricted stock. Incentive stock options may only be granted to employees. Options granted have a term of ten years and generally vest over four years. The Company settles employee stock option exercises with newly issued shares. The compensation committee of the board of directors determines (upon board of director approval) the term of awards on an individual case basis. The exercise price of incentive stock options shall be no less than 100% of the fair market value per share of the Company's common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share shall be at least 110% of fair market value. In May 2007, the Company's board of directors determined that no further grants would be made under the 2000 Plan. In July 2005, the Company adopted the Virtusa Corporation 2005 Stock Appreciation Rights Plan (the "SAR Plan"). Under the SAR Plan, the Company may grant up to 479,233 SARs to employees and consultants of Virtusa and its foreign subsidiaries, and settles the SARs in cash or common stock, as set forth in the SAR Plan. Prior to the Company's initial public offering ("IPO"), the SARs could only be settled in cash. After the Company's IPO, the cash settlement feature of the SARs ceased and exercises may only be settled in shares of the Company's common stock. In May 2007, the Company's board of directors determined that no further grants would be made under the SAR Plan. The Company's board of directors and its stockholders approved the Company's 2007 Stock Option and Incentive Plan (the "2007 Plan"), in May 2007, and the stockholders of the Company again approved the 2007 Plan in September 2008. The 2007 Plan permits the Company to make grants of incentive stock options, non-qualified stock options, SARs, deferred stock awards, restricted stock awards, unrestricted stock awards, and dividend equivalent rights. The Company reserved 830,670 shares of its common stock for the issuance of awards under the 2007 Plan. The 2007 Plan provides that the number of shares reserved and available for issuance under the plan will be automatically increased each April 1, beginning in 2008, by 2.9% of the outstanding number of shares of common stock on the immediately preceding March 31 or such lower number of shares of common stock as determined by the board of directors. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company's capitalization. Generally, shares that are forfeited, cancelled or withheld to settle tax liabilities from awards under the 2007 Plan also will be available for future awards. In addition, available shares under the 2000 Plan and the SAR Plan, as a result of the forfeiture, expiration, cancellation, termination or net issuances of awards, are automatically made available for issuance under the 2007 Plan. In May 2015, the Company's board of directors determined that no further grants would be made under the 2007 Plan. In May 2015, the Company adopted the 2015 Stock Option and Incentive Plan ("2015 Plan") which was also approved the Company's stockholders on September 1, 2015. The 2015 Plan replaces the 2007 Plan and permits the granting of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, unrestricted stock awards, performance share awards, performance-based awards to covered employees, cash-based awards and dividend equivalent rights. The Company reserved 3,000,000 shares of its common stock for the issuance of awards under the 2015 Plan as well as the number of shares of stock as is equal to the shares underlying any stock options and awards that are returned to the Company's 2007 Plan after the 2015 Plan's effective date as a result of the expiration, forfeiture, acquisition by the Company prior to vesting, cancellation or termination of such stock options and awards (other than by exercise) as set forth in the 2007 Plan. Additionally, shares that are forfeited or cancelled or otherwise terminated (other than by exercise) or held back by the Company or tendered by the grantee of any equity award to settle applicable taxes on any equity award under the 2015 Plan shall be added back to the shares of common stock available for future issuance under the 2015 Plan. At March 31, 2017, the number of shares reserved for issuance under the 2015 Plan was 1,423,165. The following tables summarize stock option and restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015, as the case may be, Plan for the fiscal years ended March 31, 2017, 2016 and 2015: Stock Option Activity Number of Weighted Weighted Aggregate Outstanding at March 31, 2014 $ Granted Exercised ) Forfeited or cancelled ) Outstanding at March 31, 2015 Granted — Exercised ) Forfeited or cancelled — — Outstanding at March 31, 2016 Granted — — Exercised ) Forfeited or cancelled ) Outstanding at March 31, 2017 $ $ Exercisable at March 31, 2017 $ $ Restricted Stock Award Activity Number of Weighted Average Unvested at March 31, 2014 $ Awarded Vested ) Forfeited ) Unvested at March 31, 2015 Awarded Vested ) Forfeited ) Unvested at March 31, 2016 Awarded — — Vested ) Forfeited ) Unvested at March 31, 2017 $ Restricted Stock Unit Activity Number of Weighted Average Unvested at March 31, 2014 $ Awarded Vested ) Forfeited ) Unvested at March 31, 2015 Awarded Vested ) Forfeited ) Unvested at March 31, 2016 Awarded Vested ) Forfeited ) Unvested at March 31, 2017 $ The aggregate intrinsic value of options exercised during the fiscal years ended March 31, 2017, 2016 and 2015 was $1,629, $4,246 and $7,556, respectively. There were no options granted during the fiscal year ended March 31, 2017 and 2016. The weighted average fair value of options granted during the fiscal year ended March 31, 2015 was $13.04. During the fiscal years ended March 31, 2017, 2016 and 2015, the Company realized $(719), $2,775 and $4,692 respectively, of income tax (expense) benefits from the exercise of stock options as a windfall (shortfall). The tables below summarizes information about the SAR Plan activity for the fiscal years ended March 31, 2017, 2016 and 2015 as follows: SAR Plan Activity Number of Weighted Weighted Aggregate Outstanding at March 31, 2014 $ Granted — — Exercised ) Forfeited or cancelled ) Outstanding at March 31, 2015 Granted — — Exercised ) Forfeited or cancelled — — Outstanding at March 31, 2016 Granted — — Exercised ) Forfeited or cancelled ) Outstanding and exercisable at March 31, 2017 — — — — The aggregate intrinsic value of SARs exercised during the fiscal years ended March 31, 2017, 2016 and 2015 was $23, $180 and $216, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2017 | |
Income Taxes | |
Income Taxes | (13) Income Taxes The income before income tax expense shown below is based on the geographic location to which such income is attributed for each of the fiscal years ended March 31, 2017, 2016 and 2015: Year Ended March 31, 2017 2016 2015 United States $ ) $ $ Foreign Total $ $ $ The provision for income taxes for each of the fiscal years ended March 31, 2017, 2016 and 2015 consisted of the following: Year Ended March 31, 2017 2016 2015 Current provision: Federal $ ) $ $ State Foreign Total current provision $ $ $ Deferred (benefit) provision: Federal $ ) $ ) $ ) State ) ) ) Foreign ) ) ) Total deferred (benefit) provision $ ) $ ) $ ) Total provision for income taxes $ $ $ The items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate are summarized as follows: Year Ended March 31, 2017 2016 2015 Tax on income before income tax expense at U.S. statutory rate $ $ $ U.S. state and local taxes, net of U.S. federal income tax effects ) Benefit from foreign subsidiaries' tax holidays ) ) ) Foreign rate difference ) ) ) Nondeductible transactions costs — Nondeductible business costs Repatriated foreign earnings — — Nondeductible interest — Other adjustments ) Income tax expense $ $ $ Deferred tax assets (liabilities) at March 31, 2017 and 2016 were as follows: March 31, 2017 2016 Deferred revenue $ $ Bad debt reserve Tax credit carry forwards Accrued expenses and reserves Share-based compensation expense Intangible assets Net operating loss Total gross deferred tax assets $ $ Valuation allowance ) ) Total deferred tax assets $ $ Depreciable assets ) ) Unrealized gains ) ) Acquisition and other liabilities ) ) Goodwill ) ) Total deferred tax liabilities $ ) $ ) Net deferred tax assets/(liabilities) $ ) $ ) In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes requiring deferred tax assets and liabilities be classified as noncurrent in the consolidated balance sheet. The Company early adopted ASU 2015-17 for the fiscal year ended March 31, 2016, which resulted in all deferred taxes being reported as noncurrent in its consolidated balance sheet. At March 31, 2016, and March 31, 2017, the net result is reflected as a long asset or liability by tax jurisdiction. The ultimate realization of deferred tax assets is dependent upon management's assessment of the Company's ability to generate sufficient taxable income to realize the deferred tax assets during the periods in which the temporary differences become deductible. Management considers the historical level of taxable income, projections for future taxable income, and tax planning strategies in making this assessment. Net income in the United States has decreased, resulting in a net loss for the year ended March 31, 2017. The Company has a significant deferred tax asset in the United States. The Company assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. As of March 31, 2017, the Company determined it is more likely than not that foreign tax credits in the U.S. will not be realized and concluded that a valuation allowance on the total foreign tax credit balance was required. The Company recorded increases to the valuation allowance totaling $506 during the fiscal year ended March 31, 2017, of which $506 was recorded in income tax expense. The Polaris valuation allowance of $1,655 relates to certain net operating losses (NOLs) and capital losses that are not likely to be realized. The Company has determined for all other deferred assets that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. We continue to monitor all positive and negative evidence related to this asset. At March 31, 2017, the Company has $278 of US foreign tax credits which begin to expire in March 2022 and for which a full valuation allowance has been recorded, $1,969 of Indian Minimum Alternative Tax ("MAT") credits which begin to expire at various dates through March 2027, $3,363 of foreign NOLs with various lives and $1,221 of capital loss carryover which begin to expire in 2020. The Company has determined that it is more likely than not that the results of future operations will generate sufficient taxable income to realize $3,676 of these deferred tax assets. During the fiscal year ended March 31, 2017, the Company recorded $3,541 of net income tax expense directly in other comprehensive income related to the unrealized gain/loss on available for sale securities, the unrealized gain/loss on effective cash flow hedges and the foreign currency loss on certain long- term intercompany balances. During the fiscal year ended March 31, 2017, the Company recognized $719 of net income tax expense directly in additional paid in capital related to a shortfall in the tax benefits of share-based compensation. The Company created two export oriented units in India, one in Bangalore during the fiscal year ended March 31, 2011 and a second unit in Hyderabad (Special Economic Zone or "SEZ") during the fiscal year ended March 31, 2010 for which no income tax exemptions were availed. The Indian subsidiaries also operate two development centers in areas designated as a SEZ, under the SEZ Act of 2005. In particular, the Company was approved as an SEZ Co-developer and has built a campus on a 6.3 acre parcel of land in Hyderabad, India that has been designated as an SEZ. As an SEZ Co-developer, the Company is entitled to certain tax benefits for any consecutive period of 10 years during the 15 year period starting in fiscal year 2008. The Company has elected to claim SEZ Co-developer income tax benefits starting in fiscal year ended March 31, 2013. In addition, the Company has leased facilities in SEZ designated locations in Hyderabad and Chennai, India. The Company's profits from the Hyderabad and Chennai SEZ operations are eligible for certain income tax exemptions for a period of up to 15 years beginning in fiscal March 31, 2009. The Company's India profits ineligible for SEZ benefits are subject to corporate income tax at the current rate of 34.61%. In the fiscal year ended March 31, 2014, the Company leased a facility in an SEZ designated location in Bangalore and Pune, India each of which is eligible for tax holidays for up to 15 years beginning in the fiscal year ended March 31, 2014. During the fiscal year ended March 31, 2016, the Company established a new unit in Hyderabad, in an SEZ designated area, for which it is eligible for tax holiday for up to 15 years. Based on the latest changes in tax laws, book profits of SEZ units are subject to MAT, commencing April 1, 2011, which will continue to negatively impact the Company's cash flows. In addition, the Company's Sri Lankan subsidiary, Virtusa (Private) Limited, is operating under a 12-year income tax holiday arrangement that is set to expire on March 31, 2019 and required Virtusa (Private) Limited to meet certain job creation and investment criteria by March 31, 2016. During the fiscal year ended March 2017, the Company believes it has fulfilled its hiring and investment commitments and is eligible for tax holiday through March 2019. The current agreement provides income tax exemption for all export business income. The Company has submitted the required support to the Board of Investment and is awaiting confirmation. At March 31, 2017, the Company believes it is eligible for the entire 12-year tax holiday. The India and Sri Lanka income tax holidays reduced the overall tax provision and increased both net income and diluted earnings per share in the fiscal years ended March 31, 2017, 2016 and 2015 by $7,973 $7,477 and $5,048, respectively, and by $0.27, $0.25 and $0.17, respectively. As of March 31, 2017, two SEZ tax holidays in Chennai and Hyderabad, India are subject to a partial expiration of fifty percent of their tax benefits through March 2018. The partial expiration of SEZ tax holidays in Chennai and Hyderabad, respectively, negatively impacted net income and diluted earnings per share in the fiscal year ended March 31, 2017, by $1,538 and $1,088 and by $0.05 and $0.04, respectively. The Company intends to indefinitely reinvest all of its accumulated and future foreign earnings outside the United States. At March 31, 2017, the Company had $383,303 of unremitted earnings from foreign subsidiaries and approximately $151,990 of cash, cash equivalents, short-term investments and long-term investments that would otherwise be available for potential distribution, if not indefinitely reinvested. Due to the various methods by which such earnings could be repatriated in the future, the amount of taxes attributable to the undistributed earnings are dependent on circumstances existing if and when remittance occurs and is not practically determinable. In the fiscal year ended March 31, 2017, the Company repatriated $17,291 million from Virtusa C.V., a subsidiary of the Company, organized to finance the acquisition of Polaris. The US tax cost was recorded during the current fiscal year as these earnings are no longer considered permanently reinvested. Due to the geographical scope of the Company's operations, the Company is subject to tax examinations in various jurisdictions. The Company's ongoing assessments of the more-likely-than-not outcomes of these examinations and related tax positions require judgment and can increase or decrease the Company's effective tax rate, as well as impact the Company's operating results. The specific timing of when the resolution of each tax position will be reached is uncertain. The Company does not believe that the outcome of any ongoing examination will have a material effect on its consolidated financial statements within the next twelve months. The Company's major taxing jurisdictions include the United States, the United Kingdom, India and Sri Lanka. In the United States, the Company remains subject to examination for all tax years ended after March 31, 2013. In the foreign jurisdictions, the Company generally remains subject to examination for tax years ended after March 31, 2005. Each fiscal year, unrecognized tax benefits may be adjusted upon the closing of the statute of limitations for income tax returns filed in various jurisdictions. The total amount of unrecognized tax benefits that would reduce income tax expense and the effective income tax rate, if recognized, is $7,612, $6,693 and $546 as of March 31, 2017, 2016 and 2015, respectively. Although it would be difficult to anticipate the final outcome on timing of resolution of any particular uncertain tax position, the Company anticipates that $130 of unrecognized tax benefits will reverse during the twelve month period ending March 31, 2018 due to settlement or expiration of statute of limitations on open tax years. All of these benefits are expected to have an impact on the effective tax rate as they are realized. The following summarizes the activity related to the gross unrecognized tax benefits: Year Ended March 31, 2017 2016 2015 Balance at beginning of the fiscal year $ $ $ Balance acquired as part of the Polaris SPA Transaction — — Foreign currency translation related to prior year tax positions ) ) Decreases related to prior year tax positions — — — Decreases related to prior year tax positions due to settlements or lapse in applicable statute of limitations ) ) ) Increases related to prior year tax positions Balance at end of the fiscal year $ $ $ The Company continues to classify accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the fiscal years ended March 31, 2017 and 2016, the Company expensed accrued interest and penalties of $522 and $52, respectively, through income tax expense consistent with its prior positions, to reflect interest and penalties on certain unrecognized tax benefits as part of income tax. The total accrued interest and penalties, including foreign currency translation relating to certain foreign and domestic tax matters at March 31, 2017 and 2016, were $1,941 and $1,374, respectively. During the fiscal year ended March 31, 2017, the Company's unrecognized tax benefits increased by $919. The increase in the unrecognized tax benefits during the fiscal year ended March 31, 2017 was primarily related to prior tax positions of Polaris acquired and exposures related to tax returns where the statute of limitations has not yet expired. The net movement in unrecognized tax benefits for the fiscal year ended March 31, 2017 was as follows: $933 recorded to income tax expense offset by $4 to other comprehensive income ("OCI") for foreign currency impact and $10 for cash settlements. The Company has recorded unrecognized tax benefits in long-term liabilities. The Company has been under income tax examination in India and the U.K. The Indian taxing authorities issued an assessment order with respect to their examination of the various tax returns for the fiscal years ended March 31, 2005 to March 31, 2014 of the Company's Indian subsidiary, Virtusa (India) Private Ltd, now merged with and into Virtusa Consulting Services Private Limited (collectively referred to as "Virtusa India"). At issue were several matters, the most significant of which was the redetermination of the arm's-length profit which should be recorded by Virtusa India on the intercompany transactions with its affiliates. During the fiscal year ended March 31, 2011, the Company entered into a competent authority settlement and settled the uncertain tax position for the fiscal years ended March 31, 2004 and 2005. However, the redetermination of arm's-length profit on transactions with respect to the Company's subsidiaries and Virtusa UK Limited has not been resolved and remains under appeal for the fiscal year ended March 31, 2005. The Company is currently appealing assessments for fiscal years ended March 31, 2005 through 2014. |
Post-retirement Benefits
Post-retirement Benefits | 12 Months Ended |
Mar. 31, 2017 | |
Post-retirement Benefits | |
Post-retirement Benefits | (14) Post-retirement Benefits The Company has noncontributory defined benefit plans (the "Benefit Plans") covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. Benefits are based on the employee's years of service and compensation at the time of termination. The Company uses March 31 as the measurement date for its plans. Cost of pension plans Year Ended March 31, 2017 2016 2015 Components of net periodic pension expense Expected return on plan assets $ ) $ ) $ ) Service costs for benefits earned Interest cost on projected benefit obligation Amortization of prior service cost Recognized net actuarial loss Net periodic pension expense $ $ $ Actuarial assumptions Year Ended March 31, 2017 2016 2015 Discount rate 6.75% - 12.00% 7.50% - 11.00% 7.80% - 10.00% Compensation increases (annual) 5.00% - 7.50% 5.00% - 7.50% 7.00% - 7.50% Expected return on assets 7.50% - 11.98% 7.50% - 12.00% 8.50% - 12.52% The discount rate is based upon high quality fixed income investments in India and Sri Lanka. The discount rates at March 31, 2017 were used to measure the year-end benefit obligations and the pension cost for the subsequent year. To determine the expected long-term rate of return on pension plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. The Company amortizes unrecognized actuarial gains or losses over a period no longer than the average future service of employees. The Company's benefit obligations are described in the following tables. Accumulated and projected benefit obligations ("ABO" and "PBO", respectively) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation. Accumulated benefit obligation and projected benefit obligation As of March 31, 2017 2016 Accumulated benefit obligation $ $ Projected benefit obligation: Beginning balance $ $ Service cost Interest cost Actuarial (gain) loss Benefits paid ) ) Polaris SPA Transaction & Plan combination Exchange rate adjustments ) Ending balance $ $ Fair value of plan assets As of March 31, 2017 2016 Balance at April 1, 2016 $ $ Employer contributions Actual return on plan assets Actuarial (gain) loss — ) Benefits paid ) ) Polaris SPA Transaction — Exchange rate adjustments ) Balance at March 31, 2017 $ $ At March 31, 2017, 2016 India and Sri Lanka together had $1,316, $679, respectively, net projected benefit obligation recorded in the consolidated balance sheets as "accrued employee compensation and benefits". Plan asset allocation March 31, 2017 Target Actual Government securities 30% - 40% % Corporate debt 40% - 50% % Other 1% - 20% % The Company's plan assets are being managed by insurance companies in India and Sri Lanka. Plan Assets The following table presents the fair values of the Company's pension plan assets. Fair Value Measurements Asset Category Total Quoted Prices in Significant At March 31, 2017 Government Bonds(1) $ $ — $ Corporate Bonds(2) — Equity Shares and Others(3) $ $ $ At March 31, 2016 Government Bonds(1) $ $ — $ Corporate Bonds(2) — Equity Shares and Others(3) $ $ $ $ (1) This category comprises government fixed income investments with investments in India and Sri Lanka. (2) This category represents investment in bonds and debentures from diverse industries. (3) This category represents equity shares, money market investments and other investments. The fair values of the government bonds are measured based on market quotes. Corporate bonds and other bonds are valued based on market quotes as of the balance sheet date. Equity share funds are valued at their market prices as of the balance sheet date. Money market funds are valued at their market price. Pension liability March 31, 2017 2016 PBO $ $ Fair value of plan assets Funded status recognized $ $ Amount recorded in accumulated other comprehensive income $ $ The amount in accumulated other comprehensive income (loss) that is expected to be recognized as a component of net periodic benefit cost over the fiscal year ended March 31, 2018 is $140. The Company expects to contribute $2,267 to its gratuity plans during the fiscal year ending March 31, 2018. The pretax amounts of prior service cost and actuarial gain (loss) recognized from accumulated other comprehensive income consists of: March 31, 2017 2016 2015 Prior service cost $ ) $ ) $ ) Net amortization gain (loss) ) ) ) Total $ ) $ ) $ ) Estimated future benefits payments Fiscal year ending March 31: 2018 $ 2019 2020 2021 2022 2023 - 2027 $ |
401(k) Plan
401(k) Plan | 12 Months Ended |
Mar. 31, 2017 | |
401(k) Plan | |
401(k) Plan | (15) 401(k) Plan The Company sponsors a defined contribution retirement savings plan, qualified under Section 401(k) of the Internal Revenue Code (the "401(k) Plan"). Eligible employees may defer a portion of their compensation into the Company's 401(k) Plan on a pre-tax and/or Roth basis. The Company's 401(k) Plan currently offers a safe harbor match feature that provides Company matching contributions for certain employee contributions. For the fiscal periods ended March 31, 2017 and 2016, the Company recorded $1,305 and $1,006 for the employer match, respectively. The Company's 401(k) Plan may be amended at the discretion of the Company's board of directors to discontinue the safe harbor match program at any time. |
Restructuring
Restructuring | 12 Months Ended |
Mar. 31, 2017 | |
Restructuring | |
Restructuring | (16) Restructuring During the three months ended December 31, 2016, the Company implemented certain cost saving and restructuring initiatives related to a workforce reduction. During the six months ended March 31, 2017, the Company incurred $2,398, primarily related to termination benefits, which have been included in selling, general and administrative expenses in the consolidated statements of income. The Company completed these initiatives by March 31, 2017. The following table summarizes the restructuring charges during the period ending March 31, 2017 March 31, 2017 Balance at April 1, 2016 $ — Provisions Cash Payments ) Balance at March 31, 2017 $ |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | (17) Accumulated Other Comprehensive Loss The changes in the components of accumulated other comprehensive loss were as follows: March 31, 2017 2016 2015 Investment securities Beginning balance $ $ ) $ ) Other comprehensive income (loss) (OCI) before reclassifications, net of tax of $57, $35, $21 Reclassifications from OCI to other income, net of tax of $3, $(22), $0 ) Less: Noncontrolling interests, net of tax of $(23), $0, $0 ) — Comprehensive income (loss) on investment securities, net of tax of $37 , $13, $21 Closing Balance $ $ $ ) Currency translation adjustments Beginning balance $ ) $ ) $ ) OCI before reclassifications ) ) ) Less: Noncontrolling interests, net of tax ) ) — Comprehensive income (loss) on currency translation adjustments ) ) ) Closing balance $ ) $ ) $ ) Cash flow hedges Beginning balance $ $ $ ) OCI before reclassifications net of tax of $6,713 $1,797, $1,511 Reclassifications from OCI to —Revenue, net of tax of $(1,432), $(94), $0 ) ) —Costs of revenue, net of tax of $(1,015), $55, $321 ) ) —Selling, general and administrative expenses, net of tax of $(611), $42, $185 ) ) Less: Noncontrolling interests, net of tax of $(71) $(512), $0 ) ) — Comprehensive income (loss) on cash flow hedges, net of tax of $3,583 $1,288, $2,017 Closing balance $ $ $ Benefit plans Beginning balance $ ) $ ) $ ) OCI before reclassifications net of tax of $(227), $(52), $(16) ) ) ) Reclassifications from net actuarial gain (loss) amortization to: —Costs of revenue, net of tax of $32, $24,$2 —Selling, general and administrative expenses, net of tax of $18, $11, $2 Reclassifications from OCI for prior service credit (cost) to: —Costs of revenue, net of tax of $3, $2,$0 —Selling, general and administrative expenses, net of tax of $0 for all periods Other adjustments (Less): Noncontrolling interests, net of tax$(10), $0, $0 ) — — Comprehensive income (loss) on benefit plans, net of tax of $(184), $15, $(12) ) ) Closing balance $ ) $ ) $ ) Accumulated other comprehensive loss $ ) $ ) $ ) |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 12 Months Ended |
Mar. 31, 2017 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | (18) Commitments, Contingencies and Guarantees The Company leases office space under operating leases, which expire at various dates through fiscal year 2025. Certain leases contain renewal provisions and generally require the Company to pay utilities, insurance, taxes, and other operating expenses. Future minimum lease payments under non-cancelable leases for the five fiscal years following March 31, 2017 and thereafter are: Operating Capital Fiscal year ending March 31: 2018 $ $ 2019 2020 2021 2022 — 2023 and thereafter — Total minimum lease payments $ $ Less: amount representing interest Present value of future lease payments Less: current portion Long term capital lease obligation $ Total rental expense for operating leases was approximately $11,701 $9,350 and $8,015 for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. Total amortization expenses for the assets purchased under capital leases were $116, $130 and $77 for the fiscal year ended March 31, 2017, 2016 and 2015 respectively. The Company indemnifies its officers and directors for certain events or occurrences under its charter or by-laws and under indemnification agreements while the officer or director is, or was, serving at its request in a defined capacity. The term of the indemnification period is with respect to the period that such person was an officer or director of the Company. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. The costs incurred to defend lawsuits or settle claims related to these indemnification obligations have not been material. As a result, the Company believes that its estimated exposure on these obligations is minimal. Accordingly, the Company had no liabilities recorded for these obligations as of March 31, 2017. The Company is insured against any actual or alleged act, error, omission, neglect, misstatement or misleading statement or breach of duty by any current or former officer, director or employee while rendering information technology services. The Company believes that its financial exposure from such actual or alleged actions, should they arise, is minimal and no liability was recorded at March 31, 2017. The Company is not a party to any pending litigation or other legal proceedings that are likely to have a material adverse effect on its consolidated financial statements. |
Derivative Financial Instrument
Derivative Financial Instruments and Trading Activities | 12 Months Ended |
Mar. 31, 2017 | |
Derivative Financial Instruments and Trading Activities | |
Derivative Financial Instruments and Trading Activities | (19) Derivative Financial Instruments and Trading Activities The Company evaluates its foreign exchange policy on an ongoing basis to assess its ability to address foreign exchange exposures on its consolidated balance sheets, statements of income and consolidated statement of cash flows from all foreign currencies, including most significantly the U.K. pound sterling, the euro, Indian rupee and Sri Lankan rupee. The Company enters into hedging programs with highly rated financial institutions in accordance with its foreign exchange policy (as approved by the Company's audit committee and board of directors) which permits hedging of material, known foreign currency exposures. There is no margin required, no cash collateral posted or received by us related to our foreign exchange forward contracts. Currently, the Company maintains four hedging programs, each with varying contract types, duration and purposes. The Company's "Cash Flow Program" is designed to mitigate the impact of volatility in the U.S. dollar equivalent of the Company's Indian rupee denominated expenses over a rolling 18-month period. The Cash Flow Program transactions currently meet the criteria for hedge accounting as cash flow hedges. In addition, as part of the Polaris acquisition, the Company has assumed a cash flow program designed to mitigate the impact of the volatility of the translation of Polaris U.S. dollar denominated revenue into Indian rupees over a rolling 18 month period ("Polaris Cash Flow Program"). These cash flow hedges meet the criteria for hedge accounting as cash flow hedges. The Company's "Balance Sheet Program" involves the use of 30-day derivative instruments designed to mitigate the monthly impact of foreign exchange gains/losses on certain intercompany balances and payments. The Company's "Economic Hedge Program" involves the purchase of derivative instruments with maturities of up to 92 days, and is designed to mitigate the impact of foreign exchange on U.K. pound sterling, the euro and Swedish krona denominated revenue and costs with respect to the quarter for which such instruments are purchased. The Balance Sheet Program and the Economic Hedge Program are treated as economic hedges as these programs do not meet the criteria for hedge accounting and all gains and losses are recognized in consolidated statement of income under the same line item as the underlying exposure being hedged. The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. All counterparties currently have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts. The Company has derivative contracts with three counterparties as of March 31, 2017. The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations. As of March 31, 2017, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of March 31, 2017, it could have been required to settle its obligations under these agreements at amounts which approximate the March 31, 2017 fair values reflected in the table below. During the year ended March 31, 2017, the Company was not in default of any of its derivative obligations. Changes in fair value of the designated cash flow hedges for our Cash Flow Program as well as the Polaris Cash Flow Program are recorded as a component of accumulated other comprehensive income (loss) ("AOCI"), net of tax until the forecasted hedged transactions occur and are then recognized in the consolidated statements of income in the same line item as the item being hedged. The Company evaluates hedge effectiveness at the time a contract is entered into, as well as on an ongoing basis. If and when hedge relationships are discontinued, and should the forecasted transaction be deemed probable of not occurring by the end of the originally specified period or within an additional two-month period of time thereafter, any related derivative amounts recorded in equity are reclassified to earnings in other income (expense). There were no amounts reclassified to earnings as a result of hedge ineffectiveness for the fiscal years ended March 31, 2017 or 2016. Changes in the fair value of the hedges for the Balance Sheet Program and the Economic Hedge Program, if any, are recognized in the same line item as the underlying exposure being hedged and the ineffective portion of cash flow hedges, if any, is recognized as other income (expense). The Company values its derivatives based on market observable inputs including both forward and spot prices for currencies. Any significant change in the forward or spot prices for hedged currencies would have a significant impact on the value of the Company's derivatives. The U.S. dollar notional value of all outstanding foreign currency derivative contracts was $153,435 and $266,706 at March 31, 2017 and 2016, respectively. Unrealized net gains related to these contracts which are expected to be reclassified from AOCI to earnings during the next 12 months are $16,071 at March 31, 2017. At March 31, 2017, the maximum outstanding term of any derivative instrument was 15 months. On July 26, 2016, the Company entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016, the Company entered into a third 12-month forward starting interest rate swap transaction to mitigate Company's interest rate risk on the Company's variable rate debt (collectively, "The Interest Rate Swap Agreements"). The Company's objective is to limit the variability of cash flows associated with changes in LIBOR interest rate payments due on the Credit Agreement by using pay-fixed, receive-variable interest rate swaps to offset the future variable rate interest payments. The Company will recognize these transactions in accordance with ASC 815 "Derivatives and Hedging," and have designated the swaps as cash flow hedges. The Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and with the pre-payment of $81,000 of principal on our existing debt, hedge approximately 86% of the Company's forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods corresponding to the quarterly principle payments on the term loan. The Interest Rate Swap agreements require the Company to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts. The counterparties to the Interest Rate Swap Agreements could demand an early termination of the 2016 Swap Agreements if the Company is in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and the Company is unable to cure the default. An event of default under the Credit Agreement includes customary events of default and failure to comply with financial covenants, including a maximum consolidated leverage ratio commencing on December 31, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Agreement, of not more than 3.00 to 1.00 for the second year of the Credit Agreement, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. As of March 31, 2017, the Company was in compliance with these covenants. The unrealized gain associated with the 2015 Swap Agreement was $1,842 as of March 31, 2017, which represents the estimated amount that the Company would receive from the counterparties in the event of an early termination. The following tables set forth the fair value of derivative instruments included in the consolidated balance sheets at March 31, 2017 and March 31, 2016: Derivatives designated as hedging instruments March 31, 2017 March 31, 2016 Foreign currency exchange contracts: Other current assets $ $ Other long-term assets $ $ Accrued expenses and other $ — $ Long-term liabilities $ — $ March 31, 2017 March 31, 2016 Interest rate swap contracts : Other long-term assets $ $ — The following tables set forth the effect of the Company's foreign currency exchange contracts on the consolidated financial statements of the Company for the fiscal years ended March 31, 2017 and 2016: Amount of Gain or (Loss) Derivatives Designated as March 31, 2017 March 31, 2016 Foreign currency exchange contracts $ $ Interest rate swaps $ $ — Amount of Gain or (Loss) Location of Gain or (Loss) Reclassified March 31, 2017 March 31, 2016 Revenue $ $ Costs of revenue $ $ Operating expenses $ $ Amount of Gain or (Loss) Derivatives not Designated Location of Gain Or (Loss) March 31, 2017 March 31, 2016 Foreign currency exchange contracts Foreign currency transaction gains (losses) $ ) $ ) Revenue $ ) $ ) Costs of revenue $ $ ) Selling, general and administrative expenses $ ) $ ) |
Business Segment Information
Business Segment Information | 12 Months Ended |
Mar. 31, 2017 | |
Business Segment Information | |
Business Segment Information | (20) Business Segment Information Accounting pronouncements establish standards for the manner in which public companies report information about operating segments in annual and interim financial statements. Operating segments are component of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker on deciding on how to allocate resources and in assessing performance. The Company's chief operating decision-maker is considered to be the Company's Chief Executive Officer. The Company's Chief Executive Officer reviews financial information presented on an entity level basis for purposes of making operating decisions and assessing financial performance. Therefore, the Company has determined that it operates in a single operating and reportable segment. Geographic information: Total revenue is attributed to geographic areas based on location of the client. Geographic information is summarized as follows: Year Ended March 31, 2017 2016 2015 Customer revenue: North America $ $ $ Europe Other Consolidated revenue $ $ $ March 31, 2017 2016 Long-lived assets, net of accumulated depreciation and amortization: North America $ $ Asia Europe and others Consolidated long-lived assets, net $ $ |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Mar. 31, 2017 | |
Quarterly Results of Operations (unaudited) | |
Quarterly Results of Operations (unaudited) | (21) Quarterly Results of Operations (unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, Revenue $ $ $ $ $ $ $ $ Costs of revenue Gross profit Operating expenses Income (loss) from operations ) Other income (expense) ) ) Income (loss) before income tax expense ) Income tax expense (benefit) ) ) Net income (loss) ) Noncontrolling interest — — — Net income (loss) attributable to Virtusa common stockholders. $ $ $ $ ) $ $ $ $ Basic earnings per share $ $ $ $ ) $ $ $ $ Diluted earnings per share $ $ $ $ ) $ $ $ $ |
Subsequent Events
Subsequent Events | 12 Months Ended |
Mar. 31, 2017 | |
Subsequent Events | |
Subsequent Events | (22) Subsequent Events On May 3, 2017, the Company entered into an investment agreement with The Orogen Group ("Orogen") pursuant to which, Orogen purchased 108,000 shares of the Company's newly issued convertible preferred stock, initially convertible into 3,000,000 shares of common stock, for an aggregate purchase price of $108,000 with an initial conversion price of $36.00 (the "Orogen Preferred Stock Financing"). Under the terms of the investment, the convertible preferred shares have a 3.875% dividend per annum, payable quarterly in additional shares of common stock and/or cash at the Company's option. The convertible preferred stock matures on May 3, 2024. The shares purchased consist of voting convertible preferred stock and a separate class of non-voting convertible preferred stock, the latter of which automatically converted into shares of voting convertible preferred stock on a one-to-one basis upon the expiration or termination of the applicable waiting period (which occurred in May 2017) under the Hart-Scott-Rodino Antitrust Improvements Act. In connection with the investment, the Company repaid $81,000 of its outstanding senior term loan, and our board of directors approved the repurchase of approximately $30,000 of the Company's common stock. On April 20, 2017, the Company purchased multiple foreign currency forward contracts designed to hedge fluctuation in the U.K. pound sterling ("GBP") against the U.S. dollar, the Swedish Krona ("SEK") against the U.S. dollar and the Euro ("EUR") against the U.S. dollar (the "Euro contracts"), each of which will expire on various dates during the period ending June 30, 2017. The GBP contracts have an aggregate notional amount of approximately £3,193 (approximately $4,081), the SEK contracts have an aggregate notional amount of approximately SEK 4,603 (approximately $516) and the EUR contracts have an aggregate notional amount of approximately EUR 290 (approximately $311). The weighted average U.S. dollar settlement rate associated with the GBP contracts is $1.278, the weighted average U.S dollar settlement rate associated with the SEK contracts is approximately $0.112, and the weighted average U.S. dollar settlement rate associated with the EUR contracts is approximately $1.073. |
Schedule II-Valuation and Quali
Schedule II-Valuation and Qualifying Accounts | 12 Months Ended |
Mar. 31, 2017 | |
Schedule II-Valuation and Qualifying Accounts | |
Schedule II-Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts Description Balance at Charged to Deductions/ Balance at (In thousands) Accounts receivable allowance for doubtful accounts: Year ended March 31, 2015 $ $ ) $ ) $ Year ended March 31, 2016 $ $ $ ) $ Year ended March 31, 2017 $ $ $ ) $ |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2017 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | (a) Principles of Consolidation The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. For those majority-owned subsidiaries that are not 100% owned by the Company, the interests of the minority owners are accounted for as noncontrolling interests. The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited and Polaris Consulting & Services Limited, Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited, organized and located in Sri Lanka; Virtusa UK Limited, Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa US LLC, Virtusa Securities Corporation, a Massachusetts securities corporation, Apparatus, Inc. organized and located in Indiana, each organized and located in the United States; Virtusa International, B.V., Virtusa C.V., Virtusa Netherlands Cooperatief U.A., Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft., Polaris Consulting & Serviced, Kft., each organized and located in Hungary; Virtusa Germany GmbH, Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH, Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited, Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited Company, Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; TradeTech Consulting Scandinavia AB located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; and Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | (b) Use of Estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Management re- evaluates these estimates on an ongoing basis. The most significant estimates relate to the recognition of revenue and profits based on the percentage of completion method of accounting for fixed-price contracts, share-based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements. |
Foreign Currency Translation | (c) Foreign Currency Translation The functional currencies of the Company's non-U.S. subsidiaries are the local currency of the country in which the subsidiary operates except for Hungary, which operates in the euro and certain Netherlands entities, which operate in the U.S. dollar. Operating and capital expenditures of the Company's subsidiaries located in India, Sri Lanka, the Netherlands, Australia, Canada, Singapore, Malaysia, the Philippines, Germany, Austria, Sweden and the United Kingdom, are denominated in their local currency which is the currency most compatible with their expected economic results. India and Sri Lanka local expenditures form the underlying basis for intercompany transactions which are subsequently conducted in both U.S. dollars and U.K. pounds sterling. U.K. client sales contracts are primarily conducted in U.K. pounds sterling. All transactions and account balances are recorded in the functional currency. The Company translates the value of these non-U.S. subsidiaries' local currency denominated assets and liabilities into U.S. dollars at the rates in effect at the balance sheet date. Resulting translation adjustments are recorded in stockholders' equity as a component of accumulated other comprehensive income (loss). The local currency denominated statement of income amounts are translated into U.S. dollars using the average exchange rates in effect during the period. Realized foreign currency transaction gains and losses are included in the consolidated statements of income. The Company's non-U.S. subsidiaries do not operate in "highly inflationary" countries. |
Derivative Instruments and Hedging Activities | (d) Derivative Instruments and Hedging Activities The Company enters into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies. The Company also enters into interest rate swaps to mitigate interest rate risk on the Company's variable rate debt. The Company designates derivative contracts as cash flow hedges if they satisfy the criteria for hedge accounting. Changes in fair values of derivatives designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income, net of taxes, until the hedged transactions occur and are then recognized in the consolidated statements of income. Changes in fair value of derivatives not designated as hedging instruments and the ineffective portion of derivatives designated as cash flow hedges are recognized immediately in the consolidated statements of income. With respect to derivatives designated as cash flow hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative will be highly effective in offsetting changes in fair values or cash flows of the hedged item. If the Company determines that a derivative or a portion thereof is not highly effective as a hedge, or if a derivative ceases to qualify for hedge accounting, the Company prospectively discontinues hedge accounting with respect to that derivative. |
Cash and Cash Equivalents and Restricted Cash | (e) Cash and Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an initial maturity of three months or less from the date of purchase to be cash equivalents. At March 31, 2017, cash equivalents consisted of money market instruments and certificates of deposit. The Company had short-term and long-term restricted cash totaling $178 and $93,940 at March 31, 2017 and 2016, respectively. Restricted cash includes escrow deposits related to acquisitions, restricted deposits with banks to secure the import of computer and other equipment and bank guarantees associated with the purchase of property and equipment of the Company's facilities in India. Restricted cash at March 31, 2016 also includes escrow deposits related to the mandatory offering for 26% of the outstanding shares of Polaris as required under India takeover rules, which was released subsequently on April 6, 2016. |
Investment Securities | (f) Investment Securities The Company classifies all debt securities as "available for sale". These securities are classified as short-term investments and long-term investments on the consolidated balance sheet based on their maturity dates and are carried at fair market value. Any unrealized gains and losses on available for sale securities are reported in accumulated other comprehensive income, net of tax, as a separate component of stockholders' equity unless the decline in value is deemed to be other-than-temporary, in which case, investments are written down to fair value and the loss is charged to the consolidated statement of income. Any realized gains and losses on trading securities are charged to the consolidated statement of income. The Company determines the cost of the securities sold based on the specific identification method. The Company conducts a periodic review and evaluation of its investment securities to determine if the decline in fair value of any security is deemed to be other-than-temporary. Other-than-temporary impairment losses are recognized on securities when: (i) the holder has an intention to sell the security; (ii) it is more likely than not that the security will be required to be sold prior to recovery; or (iii) the holder does not expect to recover the entire amortized cost basis of the security. Other-than- temporary losses are reflected in earnings as a charge against gain on sale of investments to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The Company has no intention to sell any securities in an unrealized loss position at March 31, 2017 nor is it more likely than not that the Company would be required to sell such securities prior to the recovery of the unrealized losses. At March 31, 2017, the Company believes that all impairments of investment securities are temporary in nature. |
Goodwill and Other Intangible Assets | (g) Goodwill and Other Intangible Assets The Company accounts for its business combinations under the acquisition method of accounting. The Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price for acquisitions over the fair value of the net assets acquired, including other intangible assets, is recorded as goodwill. Goodwill is not amortized but is tested for impairment at the reporting unit level, defined as the Company level, at least annually in the fourth quarter of each fiscal year or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is not more likely than not that fair value of a reporting unit is less than its carrying amount. If this is the case, then performing the quantitative two-step goodwill impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any or all of its reporting units, and proceed directly to the use of the two-step impairment test. The two-step process begins with an estimation of the fair value of a reporting unit. Goodwill impairment exists when a reporting unit's carrying value of goodwill exceeds its implied fair value. Significant judgment is applied when goodwill is assessed for impairment. For the Company's goodwill impairment analysis, the Company operates under one reporting unit. Any impairment would be measured based upon the fair value of the related assets. In performing the first step of the goodwill impairment testing and measurement process, the Company compares its entity-wide estimated fair value to net book value to identify potential impairment. Management estimates the entity-wide fair value utilizing the Company's market capitalization, plus an appropriate control premium. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the market price of the Company's common stock. If the fair value of the reporting unit is less than the book value, the second step is performed to determine if goodwill is impaired. If the Company determines through the impairment evaluation process that goodwill has been impaired, an impairment charge would be recorded in the consolidated statement of income. The Company completed the annual impairment test required during the fourth quarter of the fiscal year ended March 31, 2017 and determined that there was no impairment. The Company continues to closely monitor its market capitalization. If the Company's market capitalization, plus an estimated control premium, is below its carrying value for a period considered to be other-than-temporary, it is possible that the Company may be required to record an impairment of goodwill either as a result of the annual assessment that the Company conducts in the fourth quarter of each fiscal year, or in a future quarter if an indication of potential impairment is evident. The estimated fair value of the reporting unit on the assessment date significantly exceeded the carrying book value. Other intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods appropriate for the type of intangible asset and reported separately from goodwill. Intangible assets with definite lives are amortized over the estimated useful lives and are tested for impairment when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. The Company tests other intangible assets with definite lives for impairment by comparing the carrying amount to the sum of the net undiscounted cash flows expected to be generated by the asset whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds its net undiscounted cash flows, then an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value. |
Fair Value of Financial Instruments | (h) Fair Value of Financial Instruments At March 31, 2017 and 2016, the carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, accounts receivable, unbilled accounts receivable, restricted cash, accounts payable, accrued employee compensation and benefits, other accrued expenses and long-term debt, approximate their fair values due to the nature of the items. See note 8 to the consolidated financial statements for a discussion of the fair value of the Company's other financial instruments. |
Concentration of Credit Risk and Significant Customers | (i) Concentration of Credit Risk and Significant Customers Financial instruments which potentially expose the Company to concentrations of credit risk are primarily comprised of cash and cash equivalents, investments, derivatives, accounts receivable and unbilled accounts receivable. The Company places its cash, investments and derivatives in highly-rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non-performance by the counterparties and, accordingly, does not require collateral. At March 31, 2017 and 2016, one client accounted for 11% and 12% respectively, of gross accounts receivable. Revenue from significant clients as a percentage of the Company's consolidated revenue was as follows: Year Ended 2017 2016 2015 Customer A % % % Customer B % % % |
Property and Equipment | (j) Property and Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of their lease term or the estimated useful life of the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repair and maintenance costs are expensed as incurred. |
Long-Lived Assets | (k) Long-Lived Assets The Company reviews the carrying value of its long-lived assets or asset groups with definite useful lives to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying value of an asset to the future net undiscounted cash flows directly associated with the asset. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value exceeds the fair value of the asset. The Company uses a discounted cash flow approach or other methods, if appropriate, to assess fair value. Long-lived assets to be disposed of by sale are reported at the lower of carrying value or fair value less cost to sell and depreciation is ceased. Long-lived assets to be disposed of other than by sale are considered to be held and used until disposal. |
Internally-Developed Software | (l) Internally-Developed Software The Company capitalizes costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation and testing. Costs incurred during the preliminary project stage, along with post-implementation stages of internal use computer software, are expensed as incurred. Capitalized development costs are typically amortized over the estimated life of the software, typically three to ten years, using the straight line method, beginning with the date that an asset is ready for its intended use. At March 31, 2017 and 2016, capitalized software development costs, which include software development work in progress, were approximately $9,658 and $8,020, respectively. These costs were recorded in property and equipment. For the fiscal years ended March 31, 2017, 2016 and 2015, amortization of capitalized software development costs amounted to approximately $1,702, $556 and $706, respectively. |
Income Taxes | (m) Income Taxes Income taxes are accounted for using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Changes to enacted tax rates would result in either increases or decreases in the provision for income taxes in the period of changes. The Company evaluates the realizability of deferred tax assets and recognizes a valuation allowance when it is more likely than not that all, or a portion of, deferred tax assets will not be realized. The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in multiple jurisdictions. The Company records liabilities for estimated tax obligations in the United States and other tax jurisdictions in which it has operations (see note 13 to the consolidated financial statements). The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions. The Company's policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. |
Revenue Recognition | (n) Revenue Recognition The Company derives its revenue from a variety of IT consulting, technology implementation and application outsourcing services. Contracts for these services have different terms and conditions based on the scope, deliverables, and complexity of the engagement which require management to make judgments and estimates in determining the overall cost to the customer. Fees for these contracts may be in the form of time and materials or fixed price arrangements. Revenue is recognized as work is performed and amounts are earned. The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. Volume discounts are recorded as a reduction of revenue over the contractual period as services are performed. Revenue on time and material contracts is recognized as the services are performed and amounts are earned. Revenue from fixed price contracts related to complex design, development and customization is accounted for under the percentage of completion method. Under the percentage of completion method, management estimates the percentage of completion based upon efforts incurred as a percentage of the total estimated efforts for the specified engagement. When total cost estimates exceed revenue, the Company accrues for the estimated losses immediately. The use of the percentage of completion method requires significant judgment relative to estimating total contract revenue and efforts, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in other engagement related costs. The Company's analysis of these contracts also contemplates whether contracts should be combined or segmented. The Company combines closely related contracts when all the applicable criteria under U.S. GAAP are met. Similarly, the Company may segment a project, which may consist of a single contract or a group of contracts, with varying rates of profitability, only if all the applicable criteria under U.S. GAAP are met. Estimates of total contract revenue and efforts are continuously monitored during the term of the contract and are subject to revision as the contract progresses. When revisions in estimated contract revenue and efforts are determined, such adjustments are recorded in the period in which they are first identified. Revenue from fixed-price contracts related to consulting or other IT services is accounted for using a proportional performance method. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts to the completion of the contract. The cumulative impact of any change in estimates of the contract revenue is reflected in the period in which the changes become known. Revenue from fixed-price applications management, maintenance or support engagements is recognized as earned which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagement. The Company may enter into arrangements that consist of multiple elements and in these types of arrangements the transaction price is allocated to the individual units of accounting at the inception of the arrangement based on the relative selling price. The Company uses a hierarchy to determine the selling prices to be used for allocating revenue: (i) vendor-specific objective, evidence of fair value (VSOE), (ii) third-party evidence of selling price (TPE), and (iii) best estimate of the selling price (ESP). The Company may enter into hosting arrangements where revenue is recognized as the service is delivered, generally on a straight-line basis, over the contractual period of performance. In these types of arrangements the Company considers the rights provided to the customer in determining whether the arrangement includes the sale of a software license. Differences between the timing of billings and the recognition of revenue based on various methods of accounting are recorded as unbilled revenue or deferred revenue. Revenue includes reimbursements of travel and out-of-pocket expenses, with equivalent amounts of expense recorded in costs of revenue, of $12,920, $14,142 and $10,877 for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. Any tax assessed by a governmental authority that is incurred as a result of a revenue transaction (e.g. sales tax) is excluded from revenue and reported on a net basis. |
Costs of Revenue and Operating Expenses | (o) Costs of Revenue and Operating Expenses Costs of revenue consist principally of salaries, employee benefits and stock compensation expense, reimbursable and non-reimbursable travel costs, subcontractor fees, and immigration related expenses for IT professionals. Selling and marketing expenses are charged to operating expenses as incurred. Selling and marketing expenses are those expenses associated with promoting and selling the Company's services and include such items as sales and marketing personnel salaries, stock compensation expense and related fringe benefits, commissions, travel, and the cost of advertising and other promotional activities. Advertising and promotional expenses incurred were approximately $560, $316 and $430 for the fiscal years ended March 31, 2017, 2016 and 2015, respectively. General and administrative expenses include other operating items such as officers' and administrative personnel salaries, stock compensation expense and related fringe benefits, legal and audit expenses, public company related expenses, insurance, facility costs, provision for doubtful accounts, depreciation and amortization, including amortization of purchased intangibles and operating lease expenses. |
Share-Based Compensation | (p) Share-Based Compensation Share-based compensation cost is determined by estimating the fair value at the grant date of the Company's common stock using the Black-Scholes option pricing model, and expensing the total compensation cost on a straight line basis (net of estimated forfeitures) over the requisite employee service period. The allocation of total share-based compensation expense between costs of revenue and selling, general and administrative expenses was as follows: Year Ended March 31, 2017 2016 2015 Costs of revenue $ $ $ Selling, general and administrative expenses Total share-based compensation expense $ $ $ The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing valuation model with the following assumptions: Year Ended March 31, Weighted Average Fair Value Options Pricing Model Assumptions 2017(1) 2016(1) 2015 Risk-free interest rate — — % Expected term (in years) — — Anticipated common stock volatility — — % Expected dividend yield — — % (1) There were no options granted during the fiscal years ended March 31, 2017 and 2016. The risk-free interest rate assumptions are based on the interpolation of various U.S. Treasury bill rates in effect during the month in which stock option awards are granted. For the fiscal year ended March 31, 2015, the Company's volatility assumption is based on the historical volatility rates of the Company's common stock from exchange traded shares over periods commensurate with the expected term of each grant The expected term of employee share-based awards represents the weighted average period of time that awards are expected to remain outstanding. The determination of the expected term of share-based awards assumes that employees' behavior is a function of the awards vested, contractual lives, and the extent to which the award is in the money. Accordingly, for the fiscal year ended 2015, the expected term of our options is based on historical employee exercise patterns. The fair value of restricted awards and deferred stock awards is determined based on the number of stock awards granted and the quoted price of our stock at date of grant. As of March 31, 2017, there was $27,483 of total unrecognized compensation cost related to unvested stock options, restricted stock awards, deferred stock awards and restricted stock units granted under the Company's Amended and Restated 2000 Option Plan, the Company's 2007 Stock Option and Incentive Plan and the Company's 2015 Stock Option and Incentive Plan (see note 12 for a more complete description of these plans). The unrecognized compensation cost is expected to be recognized over a remaining weighted average period of 2.14 years. |
Allowance for Doubtful Accounts | (q) Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to make required payments. The allowance for doubtful accounts is determined by evaluating the relative credit worthiness of each client, historical collections experience and other information, including the aging of the receivables. We evaluate the collectability of our accounts receivables on an on-going basis and write-off accounts when they are deemed to be uncollectible. |
Unbilled Accounts Receivable | (r) Unbilled Accounts Receivable Unbilled accounts receivable represent revenue earned on contracts to be billed, in subsequent periods, as per the terms of the related contracts. |
Recent accounting pronouncements | (s) Recent accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in process of reviewing existing revenue contracts and related costs for evaluating the recognition of revenue from contracts with customers as well as commission and fulfillment costs that may require capitalization and amortization. The Company is also in process of identifying and implementing changes to our processes to meet the reporting and disclosure requirements. The Company expects the new standard could change the amount and timing of revenue and costs under certain arrangements types. The Company has not yet determined what impact the new guidance will have on its consolidated financial statements and related disclosures or concluded on the transition method. In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity's accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. The Company is currently evaluating the effect the new standard will have on the Company's consolidated financial statements and related disclosures. In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. The Company is currently evaluating the effect the new standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued an update (ASU 2016-05) to the standard on derivatives and hedging on the effect of derivative contract novations on existing hedge accounting relationships. As it relates to derivative instruments, novation refers to replacing one of the parties to a derivative instrument with a new party, which may occur for a variety of reasons such as: financial institution mergers, intercompany transactions, an entity exiting a particular derivatives business or relationship, or because of laws or regulatory requirements. The update clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require designation of that hedge accounting relationship provided that all other hedge accounting criteria continue to be met. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2017. Upon adoption, the entities can choose to apply on either a prospective basis or a modified retrospective basis. Early adoption of this update is permitted. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation—Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. While the Company is still evaluating the impact of adoption of the new guidance, it believes the new standard will cause volatility in its effective tax rates as well as basic and diluted earnings per share due to the tax effects related to share-based payments being recorded to the income statement (rather than equity). The volatility in future periods will depend on the Company's stock price at the awards' vesting dates, geographical mix and tax rates in applicable jurisdictions, as well as the number of awards that vest in each period. The Company will change its accounting policy on forfeitures from estimating the number of awards that are expected to vest to account for forfeitures when they occur. The Company does not expect the accounting policy change in forfeitures to have a significant impact to the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Measurement of Credit Losses on Financial Instruments, which modifies the measurement of expected credit losses of certain financial instruments. This standard update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of this new standard will have on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows. This standard update addresses eight specific cash flow issues, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance requires application using a retrospective transition method. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, an update to the standard on income taxes. This new standard requires the recognition of current and deferred income taxes when an intra-entity transfer of assets other than inventory occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2017. Early adoption is permitted in the first interim period. Upon adoption, the entities will be required to use a modified retrospective transition approach. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (Topic 230), which is intended to reduce diversity in practice on how changes in restricted cash are classified and presented in the statement of cash flows. This ASU requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The amendments in this update should be applied using a retrospective transition method to each period presented. The adoption of this guidance will impact the Company's presentation of cash and cash equivalents. As of March 31, 2017 and 2016, the Company's restricted cash was $178 and $93,940, respectively. In January 2017, the FASB issued ASU 2017-01, an update on business combinations, which clarifies the definition of a business. The update requires a business to include at least an input and a substantive process that together significantly contribute to the ability to create outputs. The update also states that the definition of a business is not met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2018. Upon adoption, entities will be required to apply the update prospectively. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, an update on goodwill, which eliminates the need to calculate the implied fair value of goodwill when an impairment is indicated. The update states that goodwill impairment is measured as the excess of a reporting unit's carrying value over its fair value, not to exceed the carrying amount of goodwill. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. We are currently evaluating the impact of the new guidance on the consolidated financial statements. In March 2017, the FASB issued ASU 2017-07, a guidance on presentation of net periodic pension cost and net periodic postretirement benefit cost. The new standard requires that an employer disaggregate the service costs components of net benefit cost. The employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component, such as in other income and expense. The guidance is effective for fiscal years beginning after December 15, 2017. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. The Company's current presentation of service cost components is consistent with the requirements of the new standard. Upon adoption of the new standard, the Company expect to present the other components within other (income) expense. |
Reclassification | (t) Reclassification Certain prior-year amounts have been reclassified to conform to the fiscal year ended March 31, 2017 presentation. |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Summary of Significant Accounting Policies | |
Schedule of revenue from significant clients as a percentage of Company's consolidated revenue | Year Ended 2017 2016 2015 Customer A % % % Customer B % % % |
Schedule of allocation of total share-based compensation expense between costs of revenue and selling, general and administrative expenses | Year Ended March 31, 2017 2016 2015 Costs of revenue $ $ $ Selling, general and administrative expenses Total share-based compensation expense $ $ $ |
Schedule of weighted average fair value options pricing model assumptions | Year Ended March 31, Weighted Average Fair Value Options Pricing Model Assumptions 2017(1) 2016(1) 2015 Risk-free interest rate — — % Expected term (in years) — — Anticipated common stock volatility — — % Expected dividend yield — — % (1) There were no options granted during the fiscal years ended March 31, 2017 and 2016. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Earnings per Share | |
Schedule of computation of basic and diluted earnings per share | Year Ended March 31, 2017 2016 2015 Numerators: Net income available to Virtusa common stockholders $ $ $ Denominators: Weighted average common shares outstanding Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units Dilutive effect of stock appreciation rights Weighted average shares—diluted Basic earnings per share $ $ $ Diluted earnings per share $ $ $ |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Polaris | |
Acquisitions | |
Summary of the purchase price allocation | Amount Useful Life Consideration Transferred: Cash paid at closing Less: Cash acquired ) Total purchase price, net of cash acquired Purchase Price Allocation: Cash and cash equivalents Accounts receivable and unbilled receivable Short term investments Other current assets Property and equipment Long term investments Long term assets Goodwill Customer relationships 10 - 15 years Trademark 2 years Accounts Payable ) Deferred revenue ) Accrued expenses and other current liabilities ) Deferred income taxes ) Long term liabilities ) Noncontrolling interest ) Total purchase price Acquisition-related costs |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets | |
Schedule of changes in goodwill | Amount Balance at April 1, 2016 $ Purchase price adjustments Foreign currency translation adjustments Balance at March 31, 2017 $ |
Schedule of Company's intangible asset carrying amounts acquired and amortization | March 31, 2017 Weighted Gross Accumulated Net Amortizable intangible assets: Customer relationships $ $ $ Trademark Technology $ $ $ March 31, 2016 Weighted Gross Accumulated Net Amortizable intangible assets: Customer relationships $ $ $ Partner relationships — Trademark Backlog $ $ $ |
Schedule of estimated amortization expense related to the purchased intangible assets | The estimated amortization expense related to the purchased intangible assets listed in the table above at March 31, 2017 is as follows for the following fiscal years: Fiscal year Amount 2018 $ 2019 2020 2021 2022 Thereafter Total $ |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Investment Securities | |
Schedule of investment securities | The following is a summary of investment securities at March 31, 2017: Amortized Gross Gross Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current ) Preference shares: Current — ) Non-current — ) Agency and short-term notes: Current — ) Non-current — ) Mutual funds: Current — Commercial paper: Current — — Equity Shares/ Options: Non-current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ The following is a summary of investment securities at March 31, 2016: Amortized Gross Gross Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current ) Preference shares: Non-current — — Agency and short-term notes: Current — Non-current ) Mutual funds: Current ) Depository receipts: Current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ |
Schedule of gross unrealized losses and fair value of the Company's investment securities with unrealized losses that are not deemed to be other-than-temporarily impaired | Less Than 12 Months Fair Value Gross Available-for-sale securities at March 31, 2017: Corporate bonds $ $ ) Agency bonds ) Preference shares ) Total $ $ ) Available-for-sale securities at March 31, 2016: Corporate bonds $ $ ) Agency bonds ) Mutual funds ) Total $ $ ) Greater Than 12 Months Fair Value Gross Available-for-sale securities at March 31, 2017: Corporate bonds $ — $ — Total $ — $ — Available-for-sale securities at March 31, 2016: Corporate bonds $ ) Total $ $ ) |
Schedule of available-for-sale securities by contractual maturity | March 31, Due in one year or less $ Due after 1 year through 5 years Due after 5 years — Total $ |
Schedule of proceeds from sale of available-for-sale investment securities | Year Ended March 31, 2017 2016 2015 Proceeds from sales of available-for-sale investment securities $ $ $ Gross gains $ $ $ Gross losses ) — ) Net realized gains on sales of available-for-sale investment securities $ $ $ |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis at March 31, 2017 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ — $ Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Interest Rate Swap Contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — — $ — — Interest Rate Swap Contracts — — — — Total liabilities $ — $ — $ — $ — The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ — $ Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — $ $ — $ Contingent consideration — — Total liabilities $ — $ $ $ |
Schedule of changes in fair value of the Company's Level 3 financial liabilities | Level 3 Balance at April 1, 2016 $ Contingent consideration recognized in earnings Payment of contingent consideration ) Balance at March 31, 2017 $ — |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Property and Equipment | |
Schedule of property and equipment and their estimated useful lives in years | March 31, Estimated Useful 2017 2016 Computer and other equipment 3 - 6 $ $ Furniture and fixtures 7 - 10 Vehicles 3 - 8 Software 3 - 10 Leasehold improvements Lesser of estimated useful life or lease term Buildings 15 - 30 Land Capital work-in-progress $ $ Less—accumulated depreciation and amortization Property and equipment, net $ $ |
Accrued Expenses and Other (Tab
Accrued Expenses and Other (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Accrued Expenses and Other | |
Schedule of accrued expenses and other | March 31, March 31, Accrued other taxes $ $ Accrued professional fees Acquisition related liabilities — Hedge liability — Accrued discounts Accrued employee travel and other expense Accrued other Total $ $ |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Debt | |
Summary of short-term debt | March 31, 2017 2016 Notes outstanding under the revolving credit facility $ — $ — Term loan- current maturities Less: deferred financing costs, current ) ) Total $ $ |
Summary of long-term debt | March 31, 2017 2016 Term loan $ $ Less: Current maturities ) ) Deferred financing costs, long-term ) ) Total $ $ |
Schedule of maturities of long-term debt | Fiscal year ending March 31: 2018 $ 2019 2020 2021 Total $ |
Stock Options, Restricted Sto43
Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Summary of stock option activity under the 2000 Plan, the 2007 Plan and the 2015 Plan | Stock Option Activity Number of Weighted Weighted Aggregate Outstanding at March 31, 2014 $ Granted Exercised ) Forfeited or cancelled ) Outstanding at March 31, 2015 Granted — Exercised ) Forfeited or cancelled — — Outstanding at March 31, 2016 Granted — — Exercised ) Forfeited or cancelled ) Outstanding at March 31, 2017 $ $ Exercisable at March 31, 2017 $ $ |
Summary of SAR Plan activity | SAR Plan Activity Number of Weighted Weighted Aggregate Outstanding at March 31, 2014 $ Granted — — Exercised ) Forfeited or cancelled ) Outstanding at March 31, 2015 Granted — — Exercised ) Forfeited or cancelled — — Outstanding at March 31, 2016 Granted — — Exercised ) Forfeited or cancelled ) Outstanding and exercisable at March 31, 2017 — — — — |
Restricted Stock Awards | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Summary of restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015 Plan | Restricted Stock Award Activity Number of Weighted Average Unvested at March 31, 2014 $ Awarded Vested ) Forfeited ) Unvested at March 31, 2015 Awarded Vested ) Forfeited ) Unvested at March 31, 2016 Awarded — — Vested ) Forfeited ) Unvested at March 31, 2017 $ |
Restricted Stock Units | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Summary of restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015 Plan | Restricted Stock Unit Activity Number of Weighted Average Unvested at March 31, 2014 $ Awarded Vested ) Forfeited ) Unvested at March 31, 2015 Awarded Vested ) Forfeited ) Unvested at March 31, 2016 Awarded Vested ) Forfeited ) Unvested at March 31, 2017 $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Income Taxes | |
Schedule of income before income tax expense based on the geographic location | Year Ended March 31, 2017 2016 2015 United States $ ) $ $ Foreign Total $ $ $ |
Schedule of provision for income taxes | Year Ended March 31, 2017 2016 2015 Current provision: Federal $ ) $ $ State Foreign Total current provision $ $ $ Deferred (benefit) provision: Federal $ ) $ ) $ ) State ) ) ) Foreign ) ) ) Total deferred (benefit) provision $ ) $ ) $ ) Total provision for income taxes $ $ $ |
Summary of items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate | Year Ended March 31, 2017 2016 2015 Tax on income before income tax expense at U.S. statutory rate $ $ $ U.S. state and local taxes, net of U.S. federal income tax effects ) Benefit from foreign subsidiaries' tax holidays ) ) ) Foreign rate difference ) ) ) Nondeductible transactions costs — Nondeductible business costs Repatriated foreign earnings — — Nondeductible interest — Other adjustments ) Income tax expense $ $ $ |
Schedule of deferred tax assets (liabilities) | March 31, 2017 2016 Deferred revenue $ $ Bad debt reserve Tax credit carry forwards Accrued expenses and reserves Share-based compensation expense Intangible assets Net operating loss Total gross deferred tax assets $ $ Valuation allowance ) ) Total deferred tax assets $ $ Depreciable assets ) ) Unrealized gains ) ) Acquisition and other liabilities ) ) Goodwill ) ) Total deferred tax liabilities $ ) $ ) Net deferred tax assets/(liabilities) $ ) $ ) |
Summary of the activity related to the gross unrecognized tax benefits | Year Ended March 31, 2017 2016 2015 Balance at beginning of the fiscal year $ $ $ Balance acquired as part of the Polaris SPA Transaction — — Foreign currency translation related to prior year tax positions ) ) Decreases related to prior year tax positions — — — Decreases related to prior year tax positions due to settlements or lapse in applicable statute of limitations ) ) ) Increases related to prior year tax positions Balance at end of the fiscal year $ $ $ |
Post-retirement Benefits (Table
Post-retirement Benefits (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Post-retirement Benefits | |
Schedule of cost of pension plans | Year Ended March 31, 2017 2016 2015 Components of net periodic pension expense Expected return on plan assets $ ) $ ) $ ) Service costs for benefits earned Interest cost on projected benefit obligation Amortization of prior service cost Recognized net actuarial loss Net periodic pension expense $ $ $ |
Schedule of actuarial assumptions | Year Ended March 31, 2017 2016 2015 Discount rate 6.75% - 12.00% 7.50% - 11.00% 7.80% - 10.00% Compensation increases (annual) 5.00% - 7.50% 5.00% - 7.50% 7.00% - 7.50% Expected return on assets 7.50% - 11.98% 7.50% - 12.00% 8.50% - 12.52% |
Schedule of accumulated benefit obligation and projected benefit obligation | As of March 31, 2017 2016 Accumulated benefit obligation $ $ Projected benefit obligation: Beginning balance $ $ Service cost Interest cost Actuarial (gain) loss Benefits paid ) ) Polaris SPA Transaction & Plan combination Exchange rate adjustments ) Ending balance $ $ |
Schedule of fair value of plan assets | As of March 31, 2017 2016 Balance at April 1, 2016 $ $ Employer contributions Actual return on plan assets Actuarial (gain) loss — ) Benefits paid ) ) Polaris SPA Transaction — Exchange rate adjustments ) Balance at March 31, 2017 $ $ |
Schedule of plan asset allocation | March 31, 2017 Target Actual Government securities 30% - 40% % Corporate debt 40% - 50% % Other 1% - 20% % |
Schedule of fair values of the Company's pension plan assets | Fair Value Measurements Asset Category Total Quoted Prices in Significant At March 31, 2017 Government Bonds(1) $ $ — $ Corporate Bonds(2) — Equity Shares and Others(3) $ $ $ At March 31, 2016 Government Bonds(1) $ $ — $ Corporate Bonds(2) — Equity Shares and Others(3) $ $ $ $ (1) This category comprises government fixed income investments with investments in India and Sri Lanka. (2) This category represents investment in bonds and debentures from diverse industries. (3) This category represents equity shares, money market investments and other investments. |
Schedule of pension liability | March 31, 2017 2016 PBO $ $ Fair value of plan assets Funded status recognized $ $ Amount recorded in accumulated other comprehensive income $ $ |
Schedule of pretax amounts of prior service cost and actuarial gain (loss) recognized from accumulated other comprehensive income | March 31, 2017 2016 2015 Prior service cost $ ) $ ) $ ) Net amortization gain (loss) ) ) ) Total $ ) $ ) $ ) |
Schedule of estimated future benefits payments | Fiscal year ending March 31: 2018 $ 2019 2020 2021 2022 2023 - 2027 $ |
Restructuring (Tables)
Restructuring (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Restructuring | |
Summary of restructuring charges | March 31, 2017 Balance at April 1, 2016 $ — Provisions Cash Payments ) Balance at March 31, 2017 $ |
Accumulated Other Comprehensi47
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Loss | |
Schedule of changes in accumulated other comprehensive loss by component | March 31, 2017 2016 2015 Investment securities Beginning balance $ $ ) $ ) Other comprehensive income (loss) (OCI) before reclassifications, net of tax of $57, $35, $21 Reclassifications from OCI to other income, net of tax of $3, $(22), $0 ) Less: Noncontrolling interests, net of tax of $(23), $0, $0 ) — Comprehensive income (loss) on investment securities, net of tax of $37 , $13, $21 Closing Balance $ $ $ ) Currency translation adjustments Beginning balance $ ) $ ) $ ) OCI before reclassifications ) ) ) Less: Noncontrolling interests, net of tax ) ) — Comprehensive income (loss) on currency translation adjustments ) ) ) Closing balance $ ) $ ) $ ) Cash flow hedges Beginning balance $ $ $ ) OCI before reclassifications net of tax of $6,713 $1,797, $1,511 Reclassifications from OCI to —Revenue, net of tax of $(1,432), $(94), $0 ) ) —Costs of revenue, net of tax of $(1,015), $55, $321 ) ) —Selling, general and administrative expenses, net of tax of $(611), $42, $185 ) ) Less: Noncontrolling interests, net of tax of $(71) $(512), $0 ) ) — Comprehensive income (loss) on cash flow hedges, net of tax of $3,583 $1,288, $2,017 Closing balance $ $ $ Benefit plans Beginning balance $ ) $ ) $ ) OCI before reclassifications net of tax of $(227), $(52), $(16) ) ) ) Reclassifications from net actuarial gain (loss) amortization to: —Costs of revenue, net of tax of $32, $24,$2 —Selling, general and administrative expenses, net of tax of $18, $11, $2 Reclassifications from OCI for prior service credit (cost) to: —Costs of revenue, net of tax of $3, $2,$0 —Selling, general and administrative expenses, net of tax of $0 for all periods Other adjustments (Less): Noncontrolling interests, net of tax$(10), $0, $0 ) — — Comprehensive income (loss) on benefit plans, net of tax of $(184), $15, $(12) ) ) Closing balance $ ) $ ) $ ) Accumulated other comprehensive loss $ ) $ ) $ ) |
Commitments, Contingencies an48
Commitments, Contingencies and Guarantees (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Commitments, Contingencies and Guarantees | |
Schedule of future minimum lease payments under non-cancelable leases | Operating Capital Fiscal year ending March 31: 2018 $ $ 2019 2020 2021 2022 — 2023 and thereafter — Total minimum lease payments $ $ Less: amount representing interest Present value of future lease payments Less: current portion Long term capital lease obligation $ |
Derivative Financial Instrume49
Derivative Financial Instruments and Trading Activities (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Derivative Financial Instruments and Trading Activities | |
Schedule of fair value of derivative instruments included in the consolidated balance sheets | March 31, 2017 March 31, 2016 Foreign currency exchange contracts: Other current assets $ $ Other long-term assets $ $ Accrued expenses and other $ — $ Long-term liabilities $ — $ March 31, 2017 March 31, 2016 Interest rate swap contracts : Other long-term assets $ $ — |
Schedule of effect of the Company's foreign currency exchange contracts on the consolidated financial statements | Amount of Gain or (Loss) Derivatives Designated as March 31, 2017 March 31, 2016 Foreign currency exchange contracts $ $ Interest rate swaps $ $ — Amount of Gain or (Loss) Location of Gain or (Loss) Reclassified March 31, 2017 March 31, 2016 Revenue $ $ Costs of revenue $ $ Operating expenses $ $ Amount of Gain or (Loss) Derivatives not Designated Location of Gain Or (Loss) March 31, 2017 March 31, 2016 Foreign currency exchange contracts Foreign currency transaction gains (losses) $ ) $ ) Revenue $ ) $ ) Costs of revenue $ $ ) Selling, general and administrative expenses $ ) $ ) |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Business Segment Information | |
Schedule of revenue attributed to geographic areas based on location of the client | Year Ended March 31, 2017 2016 2015 Customer revenue: North America $ $ $ Europe Other Consolidated revenue $ $ $ |
Schedule of long-lived assets, net of accumulated depreciation and amortization attributed to geographic areas based on location of assets | March 31, 2017 2016 Long-lived assets, net of accumulated depreciation and amortization: North America $ $ Asia Europe and others Consolidated long-lived assets, net $ $ |
Quarterly Results of Operatio51
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Mar. 31, 2017 | |
Quarterly Results of Operations (unaudited) | |
Schedule of quarterly results of operations | Three Months Ended March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, Revenue $ $ $ $ $ $ $ $ Costs of revenue Gross profit Operating expenses Income (loss) from operations ) Other income (expense) ) ) Income (loss) before income tax expense ) Income tax expense (benefit) ) ) Net income (loss) ) Noncontrolling interest — — — Net income (loss) attributable to Virtusa common stockholders. $ $ $ $ ) $ $ $ $ Basic earnings per share $ $ $ $ ) $ $ $ $ Diluted earnings per share $ $ $ $ ) $ $ $ $ |
Summary of Significant Accoun52
Summary of Significant Accounting Policies - Cash and cash equivalents and restricted cash (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Cash and cash equivalents and restricted cash | ||
Restricted cash | $ 178 | $ 93,940 |
Polaris | ||
Cash and cash equivalents and restricted cash | ||
Shares acquired (as a percent) | 26.00% |
Summary of Significant Accoun53
Summary of Significant Accounting Policies - Goodwill and other intangible assets (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2017USD ($)item | |
Summary of Significant Accounting Policies | |
Number of reporting unit | item | 1 |
Impairment charge | $ | $ 0 |
Summary of Significant Accoun54
Summary of Significant Accounting Policies - Concentration risk (Details) - Gross accounts receivable - Credit concentration - item | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Concentration of Credit Risk | ||
Number of clients | 1 | |
Concentration risk percentage | 11.00% | 12.00% |
Summary of Significant Accoun55
Summary of Significant Accounting Policies - Concentration of risk, significant Customers (Details) - Customer Concentration Risk - Sales revenue | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Customer A | |||
Significant Customers | |||
Concentration risk percentage | 17.00% | 3.00% | 2.00% |
Customer B | |||
Significant Customers | |||
Concentration risk percentage | 6.00% | 9.00% | 12.00% |
Summary of Significant Accoun56
Summary of Significant Accounting Policies - Internally-developed software, revenue recognition, and cost of revenue and operating expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue Recognition | |||
Reimbursements of travel and out-of-pocket expenses | $ 12,920 | $ 14,142 | $ 10,877 |
Costs of Revenue and Operating Expenses | |||
Advertising and promotional expenses | 560 | 316 | 430 |
Software | |||
Internally-Developed Software | |||
Capitalized software development costs | 9,658 | 8,020 | |
Amortization of capitalized software development costs | $ 1,702 | $ 556 | $ 706 |
Software | Minimum | |||
Internally-Developed Software | |||
Estimated useful life | 3 years | ||
Software | Maximum | |||
Internally-Developed Software | |||
Estimated useful life | 10 years |
Summary of Significant Accoun57
Summary of Significant Accounting Policies - Share based compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based compensation | |||
Total share-based compensation expense | $ 22,123 | $ 16,179 | $ 11,098 |
Weighted Average Fair Value Options Pricing Model Assumptions | |||
Risk-free interest rate (as a percent) | 1.62% | ||
Expected term (in years) | 5 years 7 days | ||
Anticipated common stock volatility (as a percent) | 42.59% | ||
Expected dividend yield (as a percent) | 0.00% | ||
Granted (in shares) | 0 | 0 | |
Unrecognized compensation cost | |||
Unrecognized compensation cost related to unvested stock options, restricted stock awards, deferred stock awards and restricted stock units | $ 27,483 | ||
Weighted average period for recognition of unrecognized compensation cost | 2 years 1 month 21 days | ||
Costs of revenue | |||
Share-based compensation | |||
Total share-based compensation expense | $ 2,501 | $ 1,204 | $ 1,121 |
Selling, general and administrative expenses | |||
Share-based compensation | |||
Total share-based compensation expense | $ 19,622 | $ 14,975 | $ 9,977 |
Summary of Significant Accoun58
Summary of Significant Accounting Policies - Recent accounting pronouncements (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Summary of Significant Accounting Policies | ||
Restricted cash | $ 178 | $ 93,940 |
Earnings per Share - Basic and
Earnings per Share - Basic and diluted earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Numerators: | |||||||||||
Net income available to Virtusa common stockholders | $ 10,465 | $ 4,435 | $ 3,214 | $ (6,256) | $ 12,290 | $ 11,313 | $ 11,086 | $ 10,113 | $ 11,858 | $ 44,802 | $ 42,446 |
Denominators: | |||||||||||
Weighted average common shares outstanding (in shares) | 29,650,026 | 29,233,861 | 28,753,102 | ||||||||
Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units (in shares) | 564,853 | 768,991 | 794,883 | ||||||||
Dilutive effect of stock appreciation rights (in shares) | 292 | 2,130 | 7,639 | ||||||||
Weighted average shares-diluted (in shares) | 30,215,171 | 30,004,982 | 29,555,624 | ||||||||
Basic earnings per share (in dollars per share) | $ 0.35 | $ 0.15 | $ 0.11 | $ (0.21) | $ 0.42 | $ 0.39 | $ 0.38 | $ 0.35 | $ 0.40 | $ 1.53 | $ 1.48 |
Diluted earnings per share (in dollars per share) | $ 0.34 | $ 0.15 | $ 0.11 | $ (0.21) | $ 0.41 | $ 0.38 | $ 0.37 | $ 0.34 | $ 0.39 | $ 1.49 | $ 1.44 |
Unvested restricted stock awards and unvested restricted stock units issuable and options excluded from the calculations of diluted earnings per share (in shares) | 378,627 | 68,991 | 21,629 |
Earnings per Share - Convertibl
Earnings per Share - Convertible stock (Details) - Subsequent Events. - Convertible preferred stock - Orogen $ / shares in Units, $ in Thousands | May 03, 2017USD ($)$ / sharesshares |
Convertible preferred stock issuance | |
Sale of convertible preferred stock (in shares) | 108,000 |
Shares issuable upon conversion (in shares) | 3,000,000 |
Aggregate purchase price | $ | $ 108,000 |
Conversion price (in dollars per share) | $ / shares | $ 36 |
Acquisitions - Polaris (Details
Acquisitions - Polaris (Details) ₨ in Thousands, $ in Thousands | Dec. 14, 2016USD ($) | Dec. 13, 2016 | Apr. 06, 2016INR (₨)shares | Apr. 06, 2016USD ($)shares | Apr. 05, 2016 | Mar. 03, 2016INR (₨)shares | Mar. 03, 2016USD ($)shares | Dec. 31, 2016 | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) |
Consideration Transferred: | |||||||||||
Total purchase price, net of cash acquired | $ 3,460 | $ 164,642 | $ 2,660 | ||||||||
Polaris | Public Offering | |||||||||||
Acquisitions | |||||||||||
Ownership interest sold through open offer (as a percent) | 3.70% | ||||||||||
Ownership interest prior to the sale offer (as a percent) | 78.60% | ||||||||||
Ownership interest of basic shares (as a percent) | 74.90% | 78.60% | |||||||||
Proceeds from issuance of common stock | $ 7,645 | ||||||||||
Brokerage fees and taxes | 188 | ||||||||||
Professional and legal fees and expense | $ 409 | ||||||||||
Virtusa Consulting Services Private Limited | Polaris | |||||||||||
Acquisitions | |||||||||||
Ownership interest of diluted shares (as a percent) | 77.70% | 77.70% | 51.70% | ||||||||
Ownership interest of basic shares (as a percent) | 78.80% | 78.80% | 52.90% | ||||||||
Period to sell | 1 year | 1 year | |||||||||
Stock ownership percentage threshold | 75.00% | 75.00% | |||||||||
Increase in goodwill resulting from changes in noncontrolling interest | 4,353 | ||||||||||
Increase in goodwill resulting from changes in deferred tax liabilities | 9,299 | ||||||||||
Decrease in goodwill resulting from changes related to certain assets | 4,625 | ||||||||||
Decrease in goodwill resulting from changes related to certain accruals | $ 316 | ||||||||||
Consideration Transferred: | |||||||||||
Cash paid at closing | $ 168,257 | ||||||||||
Less: Cash acquired | (40,782) | ||||||||||
Total purchase price, net of cash acquired | $ 127,475 | ||||||||||
Virtusa Consulting Services Private Limited | Polaris | Certain Polaris Shareholders | |||||||||||
Acquisitions | |||||||||||
Number of shares purchased | shares | 53,133,127 | 53,133,127 | |||||||||
Shares acquired (as a percent) | 51.70% | 51.70% | |||||||||
Consideration Transferred: | |||||||||||
Cash paid at closing | ₨ 11,391,365 | $ 168,257 | |||||||||
Virtusa Consulting Services Private Limited | Polaris | Polaris Public Shareholders | |||||||||||
Acquisitions | |||||||||||
Number of shares purchased | shares | 26,719,942 | 26,719,942 | |||||||||
Shares acquired (as a percent) | 26.00% | 26.00% | |||||||||
Total consideration | ₨ 5,935,260 | $ 89,147 | |||||||||
Escrow deposit | $ 89,220 |
Acquisitions - Polaris - Purcha
Acquisitions - Polaris - Purchase price allocation (Details) - USD ($) $ in Thousands | Mar. 03, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Purchase Price Allocation: | |||
Goodwill | $ 211,089 | $ 200,424 | |
Virtusa Consulting Services Private Limited | Polaris | |||
Purchase Price Allocation: | |||
Cash and cash equivalents | $ 40,782 | ||
Accounts receivable and unbilled receivable | 71,844 | ||
Short term investments | 17,695 | ||
Other current assets | 13,912 | ||
Property and equipment | 79,091 | ||
Long term investments | 8,396 | ||
Long term assets | 12,500 | ||
Goodwill | 129,456 | ||
Accounts Payable | (42,676) | ||
Deferred revenue | (5,117) | ||
Accrued expenses and other current liabilities | (12,062) | ||
Deferred income taxes | (21,597) | ||
Long term liabilities | (7,340) | ||
Noncontrolling interest | (152,027) | ||
Total purchase price | 168,257 | ||
Acquisition-related costs | 9,813 | ||
Customer relationships | Virtusa Consulting Services Private Limited | Polaris | |||
Purchase Price Allocation: | |||
Intangibles assets | 33,000 | ||
Trademark | Virtusa Consulting Services Private Limited | Polaris | |||
Purchase Price Allocation: | |||
Intangibles assets | $ 2,400 |
Acquisitions - Polaris - Assets
Acquisitions - Polaris - Assets acquired and liabilities assumed, useful life (Details) | Mar. 03, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Acquisitions | |||
Weighted Average Useful Life | 10 years 6 months | 10 years 3 months 18 days | |
Customer relationships | |||
Acquisitions | |||
Weighted Average Useful Life | 10 years 10 months 24 days | 10 years 9 months 18 days | |
Customer relationships | Virtusa Consulting Services Private Limited | Polaris | Minimum | |||
Acquisitions | |||
Weighted Average Useful Life | 10 years | ||
Customer relationships | Virtusa Consulting Services Private Limited | Polaris | Maximum | |||
Acquisitions | |||
Weighted Average Useful Life | 15 years | ||
Trademark | |||
Acquisitions | |||
Weighted Average Useful Life | 2 years 1 month 6 days | 1 year 3 months 18 days | |
Trademark | Virtusa Consulting Services Private Limited | Polaris | |||
Acquisitions | |||
Weighted Average Useful Life | 2 years |
Acquisitions - Polaris - Line o
Acquisitions - Polaris - Line of credit agreement (Details) - Virtusa Consulting Services Private Limited - Polaris - USD ($) $ in Thousands | Feb. 25, 2016 | Mar. 03, 2016 |
Held for sale | Net assets acquired from Polaris, held for sale | ||
Acquisitions | ||
Net assets acquired | $ 300 | |
Delayed-draw term loan | JPM | ||
Acquisitions | ||
Drawdown of loan facility | $ 200,000 |
Goodwill and Intangible Asset65
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2017USD ($)item | |
Goodwill: | |
Number of reportable segments | item | 1 |
Changes in goodwill | |
Balance at the beginning of the period | $ 200,424 |
Purchase price adjustments | 8,711 |
Foreign currency translation adjustments | 1,954 |
Balance at the end of the period | 211,089 |
Acquisition costs and goodwill deductible for tax purposes | 74,082 |
Trade Tech and Polaris | |
Changes in goodwill | |
Acquisition costs and goodwill not deductible for tax purposes | $ 148,984 |
Goodwill and Intangible Asset66
Goodwill and Intangible Assets - Intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Intangible Assets | |||
Weighted Average Useful Life | 10 years 6 months | 10 years 3 months 18 days | |
Gross Carrying Amount | $ 85,653 | $ 85,327 | |
Accumulated Amortization | 27,292 | 18,481 | |
Net Carrying Amount | 58,361 | 66,846 | |
Amortization of Intangible Assets | 9,523 | $ 5,491 | $ 4,436 |
Estimated amortization expense related to the purchased intangible assets | |||
2,018 | 9,654 | ||
2,019 | 7,287 | ||
2,020 | 7,296 | ||
2,021 | 6,852 | ||
2,022 | 5,692 | ||
Thereafter | 21,580 | ||
Total | $ 58,361 | ||
Customer relationships | |||
Intangible Assets | |||
Weighted Average Useful Life | 10 years 10 months 24 days | 10 years 9 months 18 days | |
Gross Carrying Amount | $ 82,191 | $ 81,211 | |
Accumulated Amortization | 25,629 | 17,501 | |
Net Carrying Amount | $ 56,562 | $ 63,710 | |
Partner relationships | |||
Intangible Assets | |||
Weighted Average Useful Life | 6 years | ||
Gross Carrying Amount | $ 700 | ||
Accumulated Amortization | $ 700 | ||
Trademark | |||
Intangible Assets | |||
Weighted Average Useful Life | 2 years 1 month 6 days | 1 year 3 months 18 days | |
Gross Carrying Amount | $ 2,962 | $ 2,916 | |
Accumulated Amortization | 1,513 | 217 | |
Net Carrying Amount | $ 1,449 | $ 2,699 | |
Technology | |||
Intangible Assets | |||
Weighted Average Useful Life | 5 years | ||
Gross Carrying Amount | $ 500 | ||
Accumulated Amortization | 150 | ||
Net Carrying Amount | $ 350 | ||
Backlog | |||
Intangible Assets | |||
Weighted Average Useful Life | 5 years | ||
Gross Carrying Amount | $ 500 | ||
Accumulated Amortization | 63 | ||
Net Carrying Amount | $ 437 |
Investment Securities (Details)
Investment Securities (Details) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017USD ($)item | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | |
Investment Securities | |||
Amortized Cost | $ 91,943 | $ 82,712 | |
Gross Unrealized Gains | 427 | 130 | |
Gross Unrealized Losses | (285) | (108) | |
Fair Value | 92,085 | 82,734 | |
Fair Value | |||
Less Than 12 Months | 49,997 | 39,125 | |
Greater Than 12 Months | 1,005 | ||
Gross Unrealized Loss | |||
Less Than 12 Months | $ (285) | (107) | |
Greater Than 12 Months | (1) | ||
Number of investment securities in unrealized loss positions for greater than 12 months | item | 0 | ||
Available-for-sale securities by contractual maturity | |||
Due in one year or less | $ 72,028 | ||
Due after 1 year through 5 years | 20,057 | ||
Total | 92,085 | ||
Proceeds from sales of available-for-sale investment securities and the gross gains and losses | |||
Proceeds from sales of available-for-sale investment securities | 138,232 | 124,597 | $ 52,308 |
Gross gains | 1,007 | 64 | 6 |
Gross losses | (1) | (5) | |
Net realized gains on sales of available-for-sale investment securities | 1,006 | 64 | 1 |
Interest income | 11,060 | 5,420 | $ 5,264 |
Corporate bonds | |||
Fair Value | |||
Less Than 12 Months | 44,098 | 21,435 | |
Greater Than 12 Months | 1,005 | ||
Gross Unrealized Loss | |||
Less Than 12 Months | (103) | (73) | |
Greater Than 12 Months | (1) | ||
Corporate bonds | Current | |||
Investment Securities | |||
Amortized Cost | 36,722 | 26,662 | |
Gross Unrealized Gains | 7 | 7 | |
Gross Unrealized Losses | (55) | (10) | |
Fair Value | 36,674 | 26,659 | |
Corporate bonds | Non-current | |||
Investment Securities | |||
Amortized Cost | 17,511 | 22,187 | |
Gross Unrealized Gains | 3 | 45 | |
Gross Unrealized Losses | (48) | (64) | |
Fair Value | 17,466 | 22,168 | |
Preference shares | |||
Fair Value | |||
Less Than 12 Months | 3,286 | ||
Gross Unrealized Loss | |||
Less Than 12 Months | (176) | ||
Preference shares | Current | |||
Investment Securities | |||
Amortized Cost | 1,633 | ||
Gross Unrealized Losses | (75) | ||
Fair Value | 1,558 | ||
Preference shares | Non-current | |||
Investment Securities | |||
Amortized Cost | 1,829 | 4,149 | |
Gross Unrealized Losses | (101) | ||
Fair Value | 1,728 | 4,149 | |
Agency and short-term notes | Current | |||
Investment Securities | |||
Amortized Cost | 1,816 | 1,000 | |
Gross Unrealized Gains | 1 | ||
Gross Unrealized Losses | (3) | ||
Fair Value | 1,813 | 1,001 | |
Agency and short-term notes | Non-current | |||
Investment Securities | |||
Amortized Cost | 803 | 2,500 | |
Gross Unrealized Gains | 1 | ||
Gross Unrealized Losses | (3) | (1) | |
Fair Value | 800 | 2,500 | |
Mutual funds | |||
Fair Value | |||
Less Than 12 Months | 15,991 | ||
Gross Unrealized Loss | |||
Less Than 12 Months | (33) | ||
Mutual funds | Current | |||
Investment Securities | |||
Amortized Cost | 17,934 | 17,309 | |
Gross Unrealized Gains | 371 | 9 | |
Gross Unrealized Losses | (33) | ||
Fair Value | 18,305 | 17,285 | |
Commercial paper | Current | |||
Investment Securities | |||
Amortized Cost | 2,993 | ||
Fair Value | 2,993 | ||
Depository receipts | Current | |||
Investment Securities | |||
Amortized Cost | 414 | ||
Gross Unrealized Gains | 67 | ||
Fair Value | 481 | ||
Equity Shares/ Options | Non-current | |||
Investment Securities | |||
Amortized Cost | 17 | ||
Gross Unrealized Gains | 46 | ||
Fair Value | 63 | ||
Time deposits | Current | |||
Investment Securities | |||
Amortized Cost | 10,685 | 8,491 | |
Fair Value | 10,685 | 8,491 | |
Agency bonds | |||
Fair Value | |||
Less Than 12 Months | 2,613 | 1,699 | |
Gross Unrealized Loss | |||
Less Than 12 Months | $ (6) | $ (1) |
Investments in unconsolidated68
Investments in unconsolidated Affiliates (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Investments in unconsolidated Affiliates | |
Difference between carrying amount and equity in net assets | $ 516 |
Intellect Polaris Design LLC | |
Investments in unconsolidated Affiliates | |
Ownership interest (as a percent) | 50.00% |
Fair Value of Financial Instr69
Fair Value of Financial Instruments - Financial assets and liabilities measured at fair value on a recurring basis (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Investments: | ||
Available-for-sales securities-current | $ 72,028 | $ 53,917 |
Available-for-sales securities-non-current | 20,057 | 28,817 |
Foreign currency derivative contracts | 16,431 | 5,694 |
Interest Rate Swap Contracts | 1,842 | |
Total assets | 110,358 | 88,428 |
Liabilities: | ||
Foreign currency derivative contracts | 560 | |
Contingent consideration | 839 | |
Total liabilities | 1,399 | |
Level 2 | ||
Investments: | ||
Available-for-sales securities-current | 72,028 | 53,917 |
Available-for-sales securities-non-current | 20,057 | 28,817 |
Foreign currency derivative contracts | 16,431 | 5,694 |
Interest Rate Swap Contracts | 1,842 | |
Total assets | $ 110,358 | 88,428 |
Liabilities: | ||
Foreign currency derivative contracts | 560 | |
Total liabilities | 560 | |
Level 3 | ||
Liabilities: | ||
Contingent consideration | 839 | |
Total liabilities | $ 839 |
Fair Value of Financial Instr70
Fair Value of Financial Instruments - Level 3 financial liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2015 | |
Changes in fair value of the Company's Level 3 financial liabilities | ||
Contingent consideration recognized in earnings | $ (1,833) | |
Level 3 | ||
Changes in fair value of the Company's Level 3 financial liabilities | ||
Balance at the beginning of the period | $ 839 | |
Contingent consideration recognized in earnings | 33 | |
Payment of contingent consideration | $ (872) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Property and Equipment | |||
Property and equipment, gross | $ 176,545 | $ 159,004 | |
Less-accumulated depreciation and amortization | 57,655 | 42,722 | |
Property and equipment, net | 118,890 | 116,282 | |
Depreciation and amortization expense | 16,329 | 10,988 | $ 9,116 |
Computer and other equipment | |||
Property and Equipment | |||
Property and equipment, gross | $ 41,650 | 36,866 | |
Computer and other equipment | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 3 years | ||
Computer and other equipment | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 6 years | ||
Furniture and fixtures | |||
Property and Equipment | |||
Property and equipment, gross | $ 13,755 | 12,274 | |
Furniture and fixtures | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 7 years | ||
Furniture and fixtures | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 10 years | ||
Vehicles | |||
Property and Equipment | |||
Property and equipment, gross | $ 2,085 | 1,914 | |
Vehicles | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 3 years | ||
Vehicles | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 8 years | ||
Software | |||
Property and Equipment | |||
Property and equipment, gross | $ 21,893 | 18,742 | |
Software | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 3 years | ||
Software | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 10 years | ||
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, gross | $ 8,987 | 6,574 | |
Buildings | |||
Property and Equipment | |||
Property and equipment, gross | $ 29,913 | 29,959 | |
Buildings | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 15 years | ||
Buildings | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 30 years | ||
Land | |||
Property and Equipment | |||
Property and equipment, gross | $ 56,715 | 50,050 | |
Capital work-in-progress | |||
Property and Equipment | |||
Property and equipment, gross | 1,547 | 2,625 | |
Assets under capital leases | |||
Property and Equipment | |||
Property and equipment, gross | 384 | 474 | |
Less-accumulated depreciation and amortization | $ 218 | $ 209 |
Accrued Expenses and Other (Det
Accrued Expenses and Other (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Accrued Expenses and Other | ||
Accrued other taxes | $ 5,667 | $ 7,673 |
Accrued professional fees | 12,895 | 13,557 |
Acquisition related liabilities | 4,299 | |
Hedge liability | 662 | |
Accrued discounts | 5,534 | 8,626 |
Accrued employee travel and other expense | 4,088 | 3,333 |
Accrued other | 5,067 | 4,613 |
Total | $ 33,251 | $ 42,763 |
Debt - General information (Det
Debt - General information (Details) - JPM - USD ($) $ in Thousands | Feb. 25, 2016 | Mar. 31, 2017 | Feb. 24, 2016 |
Debt | |||
Threshold period to maintain unrestricted cash | 1 year | ||
Minimum total leverage ratio limit to maintain unrestricted cash deposit | 150.00% | ||
Minimum unrestricted cash to maintain as deposit in U.S. bank on exceeding leverage ratio | $ 30,000 | ||
Minimum unrestricted cash and certain permitted investments to maintain | $ 20,000 | ||
Polaris | |||
Debt | |||
Maximum borrowing capacity under the credit agreement | $ 25,000 | ||
Term of credit facility | 5 years | ||
Interest rate (as a percentage) | 3.74% | ||
Interest expense and amortization of debt issuance cost | $ 7,493 | ||
Senior secured debt financing | |||
Debt | |||
First year maximum leverage ratio | 3.25 | ||
Second year maximum leverage ratio | 3 | ||
Maximum leverage ratio for four consecutive quarter ending on each fiscal quarter | 2.75 | ||
Minimum fixed charge coverage ratio as of last day of any reference period | 1.25 | ||
Senior secured debt financing | LIBOR | Polaris | |||
Debt | |||
Interest rate added to the base rate (as a percent) | 2.75% | ||
Revolving credit facility | Polaris | |||
Debt | |||
Maximum borrowing capacity under the credit agreement | $ 100,000 | ||
Amount outstanding under the credit facility | $ 0 | ||
Delayed-draw term loan | Polaris | |||
Debt | |||
Maximum borrowing capacity under the credit agreement | 200,000 | ||
Drew down during the period | $ 200,000 |
Debt - Current portion of long-
Debt - Current portion of long-term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Current portion of long-term debt | ||
Total | $ 8,870 | $ 8,881 |
JPM | ||
Current portion of long-term debt | ||
Less: deferred financing costs, current | (1,130) | (1,119) |
Total | 8,870 | 8,881 |
Delayed-draw term loan | JPM | ||
Current portion of long-term debt | ||
Term loan - current maturities | $ 10,000 | $ 10,000 |
Debt - Long-term debt, less cur
Debt - Long-term debt, less current portion (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Long-term debt, less current portion | ||
Total | $ 176,722 | $ 185,633 |
JPM | ||
Long-term debt, less current portion | ||
Deferred financing costs, long-term | (3,278) | (4,367) |
Total | 176,722 | 185,633 |
Delayed-draw term loan | JPM | ||
Long-term debt, less current portion | ||
Term loan | 190,000 | 200,000 |
Current maturities | $ (10,000) | $ (10,000) |
Debt - Long term debt maturitie
Debt - Long term debt maturities and swap agreements (Details) $ / shares in Units, $ in Thousands | Jul. 31, 2017USD ($)contract | May 03, 2017USD ($)$ / sharesshares | Jul. 28, 2016contract | Jul. 26, 2016contract | Mar. 31, 2017USD ($) |
Maturities of long-term debt | |||||
2,018 | $ 10,000 | ||||
2,019 | 15,000 | ||||
2,020 | 20,000 | ||||
2,021 | 145,000 | ||||
Total | 190,000 | ||||
Orogen | Convertible preferred stock | Subsequent Events. | |||||
Debt | |||||
Pre-payment of principal on existing debt | $ 81,000 | ||||
Convertible preferred stock issuance | |||||
Sale of convertible preferred stock (in shares) | shares | 108,000 | ||||
Shares issuable upon conversion (in shares) | shares | 3,000,000 | ||||
Aggregate purchase price | $ 108,000 | ||||
Conversion price (in dollars per share) | $ / shares | $ 36 | ||||
Forward starting interest rate swaps | |||||
Debt | |||||
Number of derivative contracts | contract | 1 | 2 | |||
Derivative, term of contract | 12 months | 12 months | |||
Unrealized gain on derivative | 1,842 | ||||
Forward starting interest rate swaps | Forecast | |||||
Debt | |||||
Number of derivative contracts | contract | 3 | ||||
Derivative, term of contract | 3 years | ||||
Percentage of debt hedged | 86.00% | ||||
Aggregate notional amount | $ 93,800 | ||||
Pre-payment of principal on existing debt | $ 81,000 | ||||
Amortized notional amount at a blended weighted average rate | 1.025% | ||||
U.K. Subsidiary | |||||
Debt | |||||
Receivables sold under the terms of the financing agreement | 22,741 | ||||
Amounts due related to a financing agreement to sell certain accounts receivable balances | $ 0 |
Stock Options, Restricted Sto77
Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | May 31, 2015 | May 31, 2007 | Jul. 31, 2005 | |
Number of Options to Purchase Common Shares | ||||||
Granted (in shares) | 0 | 0 | ||||
Stock options | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Term of awards | 10 years | |||||
Vesting period | 4 years | |||||
Number of Options to Purchase Common Shares | ||||||
Outstanding at the beginning of the period (in shares) | 679,138 | 806,856 | 1,084,929 | |||
Granted (in shares) | 0 | 0 | 833 | |||
Exercised (in shares) | (104,853) | (127,718) | (269,384) | |||
Forfeited or cancelled (in shares) | (4,624) | (9,522) | ||||
Outstanding at the end of the period (in shares) | 569,661 | 679,138 | 806,856 | |||
Exercisable at the end of the period (in shares) | 566,662 | |||||
Weighted Average Exercise Price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 13.58 | $ 13.15 | $ 12.01 | |||
Granted (in dollars per share) | 33.23 | |||||
Exercised (in dollars per share) | 14.18 | 10.87 | 8.56 | |||
Forfeited or cancelled (in dollars per share) | 31.97 | 15.60 | ||||
Outstanding at the end of the period (in dollars per share) | 13.31 | $ 13.58 | $ 13.15 | |||
Exercisable at the end of the period (in dollars per share) | $ 13.20 | |||||
Weighted Average Remaining Life (in years) | ||||||
Outstanding at the end of the period | 2 years 9 months 29 days | |||||
Exercisable at the end of the period | 2 years 9 months 22 days | |||||
Aggregate Intrinsic Value | ||||||
Outstanding at the end of the period | $ 9,690 | |||||
Exercisable at the end of the period | 9,690 | |||||
Additional disclosure | ||||||
Aggregate intrinsic value of options exercised | 1,629 | $ 4,246 | $ 7,556 | |||
Weighted average fair value of options granted (in dollars per share) | $ 13.04 | |||||
Income tax (expense) benefits realized from the exercise of stock options | $ (719) | $ 2,775 | $ 4,692 | |||
Stock options | Minimum | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Purchase price of the entity's common stock expressed as a percentage of fair market value | 100.00% | |||||
Stock options | More Than 10% Stockholder | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Ownership percentage triggering higher purchase price of the entity's shares | 10.00% | |||||
Stock options | More Than 10% Stockholder | Minimum | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Purchase price of the entity's common stock expressed as a percentage of fair market value | 110.00% | |||||
Restricted Stock Awards | ||||||
Number of Restricted Stock Awards | ||||||
Unvested at the beginning of the period (in shares) | 477,391 | 638,478 | 802,720 | |||
Awarded (in shares) | 140,185 | 197,715 | ||||
Vested (in shares) | (226,838) | (273,675) | (296,538) | |||
Forfeited (in shares) | (32,993) | (27,597) | (65,419) | |||
Unvested at the end of the period (in shares) | 217,560 | 477,391 | 638,478 | |||
Weighted Average Grant Date Fair Value | ||||||
Unvested at the beginning of the period (in dollars per share) | $ 31.69 | $ 24.60 | $ 19.74 | |||
Awarded (in dollars per share) | 46.25 | 33.91 | ||||
Vested (in dollars per share) | 26.41 | 22.22 | 18.34 | |||
Forfeited (in dollars per share) | 42.59 | 35.51 | 21.49 | |||
Unvested at the end of the period (in dollars per share) | $ 35.55 | $ 31.69 | $ 24.60 | |||
Number of SARs | ||||||
Granted (in shares) | 140,185 | 197,715 | ||||
Restricted Stock Units | ||||||
Number of Restricted Stock Awards | ||||||
Unvested at the beginning of the period (in shares) | 607,240 | 404,797 | 234,334 | |||
Awarded (in shares) | 1,863,658 | 426,456 | 264,579 | |||
Vested (in shares) | (339,582) | (182,697) | (87,783) | |||
Forfeited (in shares) | (151,700) | (41,316) | (6,333) | |||
Unvested at the end of the period (in shares) | 1,979,616 | 607,240 | 404,797 | |||
Weighted Average Grant Date Fair Value | ||||||
Unvested at the beginning of the period (in dollars per share) | $ 44.43 | $ 31.16 | $ 26.87 | |||
Awarded (in dollars per share) | 24.63 | 49.10 | 33.18 | |||
Vested (in dollars per share) | 39.54 | 27.93 | 25.61 | |||
Forfeited (in dollars per share) | 35.82 | 35.52 | 33.91 | |||
Unvested at the end of the period (in dollars per share) | $ 27.29 | $ 44.43 | $ 31.16 | |||
Number of SARs | ||||||
Granted (in shares) | 1,863,658 | 426,456 | 264,579 | |||
Stock appreciation rights | ||||||
Number of SARs | ||||||
Outstanding at the beginning of the period (in shares) | 1,208 | 5,110 | 12,121 | |||
Exercised (in shares) | (857) | (3,902) | (6,626) | |||
Forfeited or cancelled (in shares) | (351) | (385) | ||||
Outstanding and exercisable at the end of the period (in shares) | 1,208 | 5,110 | ||||
Weighted Average Exercise Price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 4.70 | $ 4.04 | $ 4.82 | |||
Exercised (in dollars per share) | 4.91 | 3.84 | 5.34 | |||
Forfeited or cancelled (in dollars per share) | $ 4.19 | 6.28 | ||||
Outstanding and exercisable at the end of the period (in dollars per share) | $ 4.70 | $ 4.04 | ||||
Aggregate intrinsic value of SARs exercised | $ 23 | $ 180 | $ 216 | |||
2000 Plan | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Shares available for future grant (in shares) | 0 | |||||
Number of shares reserved for issuance | 0 | |||||
SAR Plan | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Shares available for future grant (in shares) | 0 | |||||
Number of shares reserved for issuance | 479,233 | |||||
2007 Plan | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Shares available for future grant (in shares) | 0 | |||||
Number of shares reserved for issuance | 830,670 | |||||
Percentage of increase in authorized shares on each April 1, beginning in 2008 | 2.90% | |||||
2015 Plan | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Number of shares reserved for issuance | 1,423,165 | 3,000,000 |
Income Taxes - Provisional info
Income Taxes - Provisional information, reconciliation and deferred tax assets/liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Income before income tax expense based on the geographic location | |||||||||||
United States | $ (52,390) | $ 4,556 | $ 15,734 | ||||||||
Foreign | 71,208 | 53,113 | 41,666 | ||||||||
Income before income tax expense | $ 15,709 | $ 4,127 | $ 4,955 | $ (5,973) | $ 12,996 | $ 15,787 | $ 15,086 | $ 13,800 | 18,818 | 57,669 | 57,400 |
Current provision: | |||||||||||
Federal | (1,966) | 6,367 | 8,217 | ||||||||
State | 170 | 1,961 | 2,415 | ||||||||
Foreign | 15,213 | 9,719 | 7,291 | ||||||||
Total current provision | 13,417 | 18,047 | 17,923 | ||||||||
Deferred (benefit) provision: | |||||||||||
Federal | (7,870) | (2,753) | (2,066) | ||||||||
State | (2,888) | (724) | (616) | ||||||||
Foreign | (98) | (1,921) | (287) | ||||||||
Total deferred (benefit) provision | (10,856) | (5,398) | (2,969) | ||||||||
Total provision for income taxes | 3,939 | (1,414) | 499 | (463) | 488 | 4,474 | 4,000 | 3,687 | 2,561 | 12,649 | 14,954 |
Income tax reconciliation | |||||||||||
Tax on income before income tax expense at U.S. statutory rate | 6,398 | 20,184 | 20,090 | ||||||||
U.S. state and local taxes, net of U.S. federal income tax effects | (2,776) | 701 | 1,115 | ||||||||
Benefit from foreign subsidiaries' tax holidays | (7,973) | (7,477) | (5,048) | ||||||||
Foreign rate difference | (7,688) | (4,549) | (1,812) | ||||||||
Nondeductible transactions costs | 354 | 1,321 | |||||||||
Nondeductible business costs | 1,736 | 1,614 | 691 | ||||||||
Repatriated foreign earnings | 5,879 | ||||||||||
Nondeductible interest | 6,138 | 544 | |||||||||
Other adjustments | 493 | 311 | (82) | ||||||||
Total provision for income taxes | 3,939 | $ (1,414) | $ 499 | $ (463) | 488 | $ 4,474 | $ 4,000 | $ 3,687 | 2,561 | 12,649 | $ 14,954 |
Deferred tax assets (liabilities) | |||||||||||
Deferred revenue | 785 | 1,518 | 785 | 1,518 | |||||||
Bad debt reserve | 699 | 545 | 699 | 545 | |||||||
Tax credit carry forwards | 2,247 | 3,433 | 2,247 | 3,433 | |||||||
Accrued expenses and reserves | 18,787 | 12,013 | 18,787 | 12,013 | |||||||
Share-based compensation expense | 4,135 | 4,907 | 4,135 | 4,907 | |||||||
Intangible assets | 4,189 | 3,735 | 4,189 | 3,735 | |||||||
Net operating loss | 4,584 | 2,723 | 4,584 | 2,723 | |||||||
Total gross deferred tax assets | 35,426 | 28,874 | 35,426 | 28,874 | |||||||
Valuation allowance | (3,155) | (2,649) | (3,155) | (2,649) | |||||||
Total deferred tax assets | 32,271 | 26,225 | 32,271 | 26,225 | |||||||
Depreciable assets | (10,441) | (662) | (10,441) | (662) | |||||||
Unrealized gains | (5,884) | (2,598) | (5,884) | (2,598) | |||||||
Acquisition and other liabilities | (12,780) | (18,079) | (12,780) | (18,079) | |||||||
Goodwill | (6,755) | (5,117) | (6,755) | (5,117) | |||||||
Total deferred tax liabilities | (35,860) | (26,456) | (35,860) | (26,456) | |||||||
Net deferred tax assets/(liabilities) | (3,589) | $ (231) | (3,589) | $ (231) | |||||||
Change in valuation allowance | 506 | ||||||||||
Deferred tax assets likely to be realized | 3,676 | 3,676 | |||||||||
Income Tax Expense | |||||||||||
Deferred tax assets (liabilities) | |||||||||||
Change in valuation allowance | 506 | ||||||||||
Polaris | |||||||||||
Deferred tax assets (liabilities) | |||||||||||
Valuation allowance | $ (1,655) | $ (1,655) |
Income Taxes - Tax credit carry
Income Taxes - Tax credit carryforward (Details) $ in Thousands | Mar. 31, 2017USD ($) |
India | |
Income taxes | |
Minimum Alternative Tax credit carry forward | $ 1,969 |
Foreign | |
Income taxes | |
Tax credits | $ 278 |
Income Taxes - Operating loss c
Income Taxes - Operating loss carryforward (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Loss Carryforwards | |||
Capital loss carryforwards | $ 1,221 | ||
Net income tax expense recorded in other comprehensive income related to the unrealized gain/loss on available for sale securities, the unrealized gain/loss on effective cash flow hedges and the foreign currency loss on certain long term intercompany balances | 3,541 | ||
Net income tax expense recognized directly in additional paid in capital related to shortfall in tax benefits of share based compensation | 719 | $ (2,775) | $ (4,692) |
Foreign | |||
Operating Loss Carryforwards | |||
Net operating loss carry forwards | $ 3,363 |
Income Taxes - Income tax holid
Income Taxes - Income tax holiday and other (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Mar. 31, 2017USD ($)aitem$ / shares | Mar. 31, 2016USD ($)$ / shares | Mar. 31, 2015USD ($)$ / shares | Mar. 31, 2011item | |
Income Taxes. | ||||
Unremitted earnings from foreign subsidiaries | $ 383,303 | |||
Cash, cash equivalents, short-term investments and long-term investments available for distribution if not indefinitely reinvested | 151,990 | |||
Amount of foreign earnings repatriated from Virtusa C.V | 17,291 | |||
Total amount of unrecognized tax benefits that would reduce income tax expense and the effective income tax rate, if recognized | 7,612 | $ 6,693 | $ 546 | |
Unrecognized tax benefits to be realized through settlement with tax authorities or expiration of statute of limitations during next twelve months | 130 | |||
Activity related to the gross unrecognized tax benefits | ||||
Balance as of beginning of the fiscal year | 6,693 | 546 | 410 | |
Balance acquired as a part of the Polaris SPA Transaction | 6,172 | |||
Foreign currency translation related to prior year tax positions | 122 | |||
Foreign currency translation related to prior year tax positions | (42) | (3) | ||
Decreases related to prior year tax positions due to settlements or lapse in applicable statute of limitations | (597) | (117) | (94) | |
Increases related to prior year tax positions | 1,394 | 134 | 233 | |
Balance at end of the fiscal year | 7,612 | 6,693 | 546 | |
Accrued interest and penalties | 522 | 52 | ||
Total accrued interest and penalties, including foreign currency translation relating to certain foreign and domestic tax matters | 1,941 | 1,374 | ||
Increase in unrecognized tax benefits | 919 | |||
Cash settlements | ||||
Activity related to the gross unrecognized tax benefits | ||||
Increase in unrecognized tax benefits | 10 | |||
Chennai | ||||
Income Taxes. | ||||
Decrease in net income due to expiration of income tax holiday | $ 1,538 | |||
Decrease in net income due to expiration of income tad holiday (in dollars per share) | $ / shares | $ 0.05 | |||
Hyderabad | ||||
Income Taxes. | ||||
Decrease in net income due to expiration of income tax holiday | $ 1,088 | |||
Decrease in net income due to expiration of income tad holiday (in dollars per share) | $ / shares | $ 0.04 | |||
Hyderabad and Chennai | ||||
Income Taxes. | ||||
Number of special economic zones subject to partial expiration of tax benefits | item | 2 | |||
Percentage of tax benefit subject to expiration | 50.00% | |||
India | ||||
Income Taxes. | ||||
Number of export oriented units created | item | 2 | |||
India | Indian operations in areas designated as a SEZ | ||||
Income Taxes. | ||||
Number of development centers operated | item | 2 | |||
India | Indian operations in areas designated as a SEZ | Hyderabad | ||||
Income Taxes. | ||||
Parcel of land (in acres) | a | 6.3 | |||
Consecutive period of income tax exemption | 10 years | |||
Income tax benefits total eligibility period | 15 years | |||
India | Virtusa India | ||||
Income Taxes. | ||||
Current corporate income tax rate | 34.61% | |||
Sri Lanka | Virtusa (Private) Limited | ||||
Income Taxes. | ||||
Income tax exemption period | 12 years | |||
India and Sri Lanka | ||||
Income Taxes. | ||||
Increase in net income due to income tax holiday | $ 7,973 | $ 7,477 | $ 5,048 | |
Increase in diluted earning per share due to income tax holiday (in dollars per share) | $ / shares | $ 0.27 | $ 0.25 | $ 0.17 | |
Maximum | India | Bangalore | Indian Operations Software Technology Parks | ||||
Income Taxes. | ||||
Income tax exemption period | 15 years | |||
Maximum | India | Indian operations in areas designated as a SEZ | Hyderabad | ||||
Income Taxes. | ||||
Income tax exemption period | 15 years | |||
Maximum | India | Indian operations in areas designated as a SEZ | Pune | ||||
Income Taxes. | ||||
Income tax exemption period | 15 years | |||
Maximum | India | Indian operations in areas designated as a SEZ | Hyderabad and Chennai | ||||
Income Taxes. | ||||
Income tax exemption period | 15 years | |||
Other Comprehensive Loss | ||||
Activity related to the gross unrecognized tax benefits | ||||
Increase in unrecognized tax benefits | $ 4 | |||
Income Tax Expense | ||||
Activity related to the gross unrecognized tax benefits | ||||
Increase in unrecognized tax benefits | $ 933 |
Post-retirement Benefits (Detai
Post-retirement Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Fair value of plan assets | |||
Accrued employee compensation and benefits | $ 52,582 | $ 53,897 | |
Benefit Plans: | |||
Components of net periodic pension expense | |||
Expected return on plan assets | (606) | (336) | $ (214) |
Service costs for benefits earned | 1,326 | 780 | 564 |
Interest cost on projected benefit obligation | 580 | 281 | 233 |
Amortization of prior service cost | 9 | 9 | 10 |
Recognized net actuarial loss | 135 | 151 | 114 |
Net periodic pension cost | 1,444 | 885 | 707 |
Accumulated benefit obligation and projected benefit obligation | |||
Accumulated benefit obligation | 6,685 | 5,081 | |
Projected benefit obligation: | |||
Beginning balance | 7,312 | 3,604 | |
Service cost | 1,326 | 780 | 564 |
Interest cost | 580 | 281 | 233 |
Actuarial (gain) loss | 637 | 182 | |
Benefits paid | (1,277) | (521) | |
Polaris SPA Transaction & Plan combination | 449 | 3,227 | |
Exchange rate adjustments | 121 | (241) | |
Ending balance | 9,148 | 7,312 | 3,604 |
Fair value of plan assets | |||
Balance at the beginning of the year | 6,633 | 3,054 | |
Employer contributions | 1,772 | 1,036 | |
Actual return on plan assets | 625 | 301 | |
Actuarial (gain) loss | (5) | ||
Benefits paid | (1,277) | (521) | |
Polaris SPA Transaction | 2,944 | ||
Exchange rate adjustments | 79 | (176) | |
Balance at the end of the year | 7,832 | 6,633 | $ 3,054 |
Benefit Plans: | India and Sri Lanka | |||
Fair value of plan assets | |||
Accrued employee compensation and benefits | $ 1,316 | $ 679 | |
Minimum | Benefit Plans: | |||
Actuarial assumptions | |||
Discount rate (as a percent) | 6.75% | 7.50% | 7.80% |
Compensation increases (annual) (as a percent) | 5.00% | 5.00% | 7.00% |
Expected return on assets (as a percent) | 7.50% | 7.50% | 8.50% |
Maximum | Benefit Plans: | |||
Actuarial assumptions | |||
Discount rate (as a percent) | 12.00% | 11.00% | 10.00% |
Compensation increases (annual) (as a percent) | 7.50% | 7.50% | 7.50% |
Expected return on assets (as a percent) | 11.98% | 12.00% | 12.52% |
Post-retirement Benefits - Esti
Post-retirement Benefits - Estimated future benefits payments (Details) - Benefit Plans: - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Plan asset allocation | |||
Fair values of the pension plan assets | $ 7,832 | $ 6,633 | $ 3,054 |
Pension liability | |||
PBO | 9,148 | 7,312 | 3,604 |
Fair value of plan assets | 7,832 | 6,633 | 3,054 |
Funded status recognized | 1,316 | 679 | |
Amount recorded in accumulated other comprehensive income | 1,397 | 924 | |
Amount in accumulated other comprehensive income (loss) that is expected to be recognized as a component of net periodic benefit cost | 140 | ||
Expected contribution to gratuity plans by employer | 2,267 | ||
Pretax amounts of prior service cost recognized in accumulated other comprehensive income | |||
Prior service cost | (9) | (9) | (10) |
Net amortization gain (loss) | (135) | (151) | (114) |
Total | (144) | (160) | $ (124) |
Estimated future benefits payments | |||
2,018 | 1,559 | ||
2,019 | 1,847 | ||
2,020 | 1,799 | ||
2,021 | 2,005 | ||
2,022 | 2,221 | ||
2023-2027 | 11,542 | ||
Level 1 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | 257 | 192 | |
Pension liability | |||
Fair value of plan assets | 257 | 192 | |
Level 2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | 7,575 | 6,441 | |
Pension liability | |||
Fair value of plan assets | $ 7,575 | 6,441 | |
Government Securities/Bonds | |||
Plan asset allocation | |||
Actual Allocation (as a percent) | 39.00% | ||
Fair values of the pension plan assets | $ 3,065 | 2,187 | |
Pension liability | |||
Fair value of plan assets | $ 3,065 | 2,187 | |
Government Securities/Bonds | Minimum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 30.00% | ||
Government Securities/Bonds | Maximum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 40.00% | ||
Government Securities/Bonds | Level 2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 3,065 | 2,187 | |
Pension liability | |||
Fair value of plan assets | $ 3,065 | 2,187 | |
Corporate bonds | |||
Plan asset allocation | |||
Actual Allocation (as a percent) | 49.00% | ||
Fair values of the pension plan assets | $ 3,804 | 2,524 | |
Pension liability | |||
Fair value of plan assets | $ 3,804 | 2,524 | |
Corporate bonds | Minimum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 40.00% | ||
Corporate bonds | Maximum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 50.00% | ||
Corporate bonds | Level 2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 3,804 | 2,524 | |
Pension liability | |||
Fair value of plan assets | $ 3,804 | 2,524 | |
Equity Shares and Others | |||
Plan asset allocation | |||
Actual Allocation (as a percent) | 12.00% | ||
Fair values of the pension plan assets | $ 963 | 1,922 | |
Pension liability | |||
Fair value of plan assets | $ 963 | 1,922 | |
Equity Shares and Others | Minimum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 1.00% | ||
Equity Shares and Others | Maximum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 20.00% | ||
Equity Shares and Others | Level 1 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 257 | 192 | |
Pension liability | |||
Fair value of plan assets | 257 | 192 | |
Equity Shares and Others | Level 2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | 706 | 1,730 | |
Pension liability | |||
Fair value of plan assets | $ 706 | $ 1,730 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
401(k) Plan | ||
Employer matching contribution recorded | $ 1,305 | $ 1,006 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Mar. 31, 2017 | |
Restructuring | ||
Restructuring charges for one-time termination benefits | $ 2,398 | |
Restructuring charges | ||
Provisions | $ 2,398 | |
Cash Payments | (2,144) | |
Balance at end of year | $ 254 | $ 254 |
Accumulated Other Comprehensi86
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Changes in the components of accumulated other comprehensive loss | |||||||||||
Balance | $ 627,955 | $ 423,775 | $ 627,955 | $ 423,775 | $ 374,070 | ||||||
Reclassifications from OCI to: | |||||||||||
Revenue | $ 225,962 | $ 217,209 | $ 210,089 | 205,471 | $ 171,853 | $ 150,603 | $ 143,002 | 134,844 | 858,731 | 600,302 | 478,986 |
Costs of revenue | (160,174) | (154,847) | (152,369) | (153,560) | (111,540) | (96,908) | (93,500) | (87,362) | (620,950) | (389,310) | (304,422) |
Selling, General and Administrative Expense | (55,564) | $ (55,904) | $ (54,183) | (53,759) | (54,793) | $ (39,561) | $ (36,246) | (35,072) | (219,410) | (165,672) | (121,996) |
(Less) : Noncontrolling interests, net of tax | (5,990) | (1,285) | |||||||||
Other comprehensive income (loss) | 3,981 | (6,726) | (6,414) | ||||||||
Balance | 585,016 | 627,955 | 585,016 | 627,955 | 423,775 | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Available-for-sale Securities, Tax | 60 | 13 | 21 | ||||||||
Accumulated other comprehensive loss. | |||||||||||
Changes in the components of accumulated other comprehensive loss | |||||||||||
Balance | (42,139) | (34,128) | (42,139) | (34,128) | (27,714) | ||||||
Reclassifications from OCI to: | |||||||||||
Other comprehensive income (loss) | 2,390 | (8,011) | (6,414) | ||||||||
Balance | (39,749) | (42,139) | (39,749) | (42,139) | (34,128) | ||||||
Investment securities. | |||||||||||
Changes in the components of accumulated other comprehensive loss | |||||||||||
Balance | 23 | (18) | 23 | (18) | (54) | ||||||
Other comprehensive income (loss) (OCI) before reclassifications net of tax | 72 | 102 | 36 | ||||||||
Reclassifications from OCI to: | |||||||||||
(Less) : Noncontrolling interests, net of tax | (44) | 3 | |||||||||
Other comprehensive income (loss) | 34 | 41 | 36 | ||||||||
Balance | 57 | 23 | 57 | 23 | (18) | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI before reclassification, tax | 57 | 35 | 21 | ||||||||
Noncontrolling interests, Tax | (23) | 0 | 0 | ||||||||
OCI, Available-for-sale Securities, Tax | 37 | 13 | 21 | ||||||||
Investment securities. | Reclassification out of accumulated other comprehensive income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Other Income | 6 | (64) | |||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Reclassification Adjustment from AOCI for Sale of Securities, Tax | 3 | (22) | 0 | ||||||||
Currency translation adjustments | |||||||||||
Changes in the components of accumulated other comprehensive loss | |||||||||||
Balance | (45,211) | (35,565) | (45,211) | (35,565) | (23,253) | ||||||
Other comprehensive income (loss) (OCI) before reclassifications net of tax | (3,810) | (9,324) | (12,312) | ||||||||
Reclassifications from OCI to: | |||||||||||
(Less) : Noncontrolling interests, net of tax | (1,394) | (322) | |||||||||
Other comprehensive income (loss) | (5,204) | (9,646) | (12,312) | ||||||||
Balance | (50,415) | (45,211) | (50,415) | (45,211) | (35,565) | ||||||
Cash flow hedges | |||||||||||
Changes in the components of accumulated other comprehensive loss | |||||||||||
Balance | 3,934 | 2,387 | 3,934 | 2,387 | (3,829) | ||||||
Other comprehensive income (loss) (OCI) before reclassifications net of tax | 16,328 | 3,373 | 5,169 | ||||||||
Reclassifications from OCI to: | |||||||||||
(Less) : Noncontrolling interests, net of tax | (134) | (966) | |||||||||
Other comprehensive income (loss) | 7,855 | 1,547 | 6,216 | ||||||||
Balance | 11,789 | 3,934 | 11,789 | 3,934 | 2,387 | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI before reclassification, tax | 6,713 | 1,797 | 1,511 | ||||||||
Noncontrolling interests, Tax | (71) | (512) | 0 | ||||||||
Comprehensive income (loss), Tax | 3,583 | 1,288 | 2,017 | ||||||||
Cash flow hedges | Reclassification out of accumulated other comprehensive income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Revenue | (2,706) | (178) | |||||||||
Costs of revenue | (3,526) | (446) | 659 | ||||||||
Selling, General and Administrative Expense | (2,107) | (236) | 388 | ||||||||
Cash flow hedges | Reclassification out of accumulated other comprehensive income | Revenue | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax | (1,432) | (94) | 0 | ||||||||
Cash flow hedges | Reclassification out of accumulated other comprehensive income | Costs of revenue | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax | (1,015) | 55 | 321 | ||||||||
Cash flow hedges | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax | (611) | 42 | 185 | ||||||||
Benefit plans | |||||||||||
Changes in the components of accumulated other comprehensive loss | |||||||||||
Balance | $ (885) | $ (932) | (885) | (932) | (578) | ||||||
Other comprehensive income (loss) (OCI) before reclassifications net of tax | (379) | (173) | (477) | ||||||||
Reclassifications from OCI to: | |||||||||||
Other adjustments | 12 | 99 | 2 | ||||||||
(Less) : Noncontrolling interests, net of tax | (19) | ||||||||||
Other comprehensive income (loss) | (295) | 47 | (354) | ||||||||
Balance | $ (1,180) | $ (885) | (1,180) | (885) | (932) | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI before reclassification, tax | (227) | (52) | (16) | ||||||||
Noncontrolling interests, Tax | (10) | 0 | 0 | ||||||||
Comprehensive income (loss), Tax | (184) | 15 | (12) | ||||||||
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Costs of revenue | 5 | 6 | 8 | ||||||||
Selling, General and Administrative Expense | 1 | 1 | 2 | ||||||||
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | Costs of revenue | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax | 3 | 2 | 0 | ||||||||
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax | 0 | 0 | 0 | ||||||||
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Costs of revenue | 53 | 78 | 66 | ||||||||
Selling, General and Administrative Expense | 32 | 36 | 45 | ||||||||
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | Costs of revenue | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Tax | 32 | 24 | 2 | ||||||||
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Tax | $ 18 | $ 11 | $ 2 |
Commitments, Contingencies an87
Commitments, Contingencies and Guarantees - Future minimum lease payments (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Operating Leases | |
2,018 | $ 9,301 |
2,019 | 5,351 |
2,020 | 4,014 |
2,021 | 3,128 |
2,022 | 2,089 |
2023 and thereafter | 2,674 |
Total minimum lease payments | 26,557 |
Capital Leases | |
2,018 | 130 |
2,019 | 89 |
2,020 | 45 |
2,021 | 15 |
Total minimum lease payments | 279 |
Less: amount representing interest | 41 |
Present value of future lease payments | 238 |
Less: current portion | 107 |
Long term capital lease obligation | $ 131 |
Commitments, Contingencies an88
Commitments, Contingencies and Guarantees - Other commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Commitments, Contingencies and Guarantees | |||
Total rental expense for operating leases | $ 11,701 | $ 9,350 | $ 8,015 |
Amortization expenses for assets purchased under capital leases | $ 116 | $ 130 | $ 77 |
Commitments, Contingencies an89
Commitments, Contingencies and Guarantees - Loss contingencies (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Indemnification agreement | |
Loss contingencies | |
Liability recorded | $ 0 |
Actual or alleged act, error, omission, neglect, misstatement or misleading statement or breach of duty | |
Loss contingencies | |
Liability recorded | $ 0 |
Derivative Financial Instrume90
Derivative Financial Instruments - Derivatives (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2017USD ($)item | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | |
Derivative Financial Instruments | |||||||||||
Other income (expense) | $ 5,485 | $ (2,331) | $ 1,418 | $ (4,125) | $ 7,476 | $ 1,653 | $ 1,830 | $ 1,390 | $ 447 | $ 12,349 | $ 4,832 |
Number of parties under derivative | item | 3 | 3 | |||||||||
Foreign currency exchange contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Number of hedging programs maintained | item | 4 | ||||||||||
U.S. dollar notional value | $ 153,435 | $ 266,706 | $ 153,435 | 266,706 | |||||||
Foreign currency exchange contract | Maximum | |||||||||||
Derivative Financial Instruments | |||||||||||
Maturity period of derivatives | 15 months | ||||||||||
Derivatives designated as hedging instrument | Foreign currency exchange contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Period hedged by Cash Flow Program | 18 months | ||||||||||
Additional period after which the contract is deemed ineffective | 2 months | ||||||||||
Unrealized net gains related to derivative instruments expected to be reclassified from AOCI into earnings during the next 12 months | $ 16,071 | ||||||||||
Derivatives designated as hedging instrument | Foreign currency exchange contract | Cash flow hedges | Reclassification out of accumulated other comprehensive income | |||||||||||
Derivative Financial Instruments | |||||||||||
Other income (expense) | $ 0 | $ 0 | |||||||||
Derivatives not designated as hedging instrument | Foreign currency exchange contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Maturity period of derivatives | 30 days | ||||||||||
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Maximum | |||||||||||
Derivative Financial Instruments | |||||||||||
Maturity period of derivatives | 92 days | ||||||||||
Polaris | Derivatives designated as hedging instrument | Foreign currency exchange contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Period hedged by Cash Flow Program | 18 months |
Derivative Financial Instrume91
Derivative Financial Instruments - Interest rate swaps (Details) $ in Thousands | Jul. 31, 2017USD ($)contract | Jul. 28, 2016contract | Jul. 26, 2016contract | Feb. 25, 2016 | Mar. 31, 2017USD ($) |
Forward starting interest rate swaps | |||||
Interest rate cash flow hedges | |||||
Derivative, term of contract | 12 months | 12 months | |||
Unrealized gain on derivative | $ 1,842 | ||||
Number of derivative contracts | contract | 1 | 2 | |||
Forward starting interest rate swaps | Forecast | |||||
Interest rate cash flow hedges | |||||
Derivative, term of contract | 3 years | ||||
Aggregate notional amount | $ 93,800 | ||||
Pre-payment of principal on existing debt | $ 81,000 | ||||
Percentage of debt hedged | 86.00% | ||||
Number of derivative contracts | contract | 3 | ||||
Amortized notional amount at a blended weighted average rate | 1.025% | ||||
JPM | Senior secured debt financing | |||||
Interest rate cash flow hedges | |||||
First year maximum leverage ratio | 3.25 | ||||
Second year maximum leverage ratio | 3 | ||||
Maximum leverage ratio for four consecutive quarter ending on each fiscal quarter | 2.75 | ||||
Minimum fixed charge coverage ratio as of last day of any reference period | 1.25 |
Derivative Financial Instrume92
Derivative Financial Instruments - Foreign currency exchange contracts designated as hedging instruments (Details) - Derivatives designated as hedging instrument - Foreign currency exchange contract - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Foreign currency exchange and interest rate swap contracts | ||
Other current assets | $ 15,544 | $ 3,706 |
Other long-term assets | $ 887 | 1,988 |
Accrued expenses and other | 278 | |
Long-term liabilities | $ 282 |
Derivative Financial Instrume93
Derivative Financial Instruments - Interest rate swap contracts designated as hedging instruments (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Derivatives designated as hedging instrument | Forward starting interest rate swaps | |
Foreign currency exchange and interest rate swap contracts | |
Other long-term assets | $ 1,842 |
Derivative Financial Instrume94
Derivative Financial Instruments - Effect of foreign currency exchange contracts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | $ 4,138 | $ 272 |
Costs of revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | 4,541 | 391 |
Operating expenses | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion) | 2,718 | 194 |
Derivatives designated as hedging instrument | Foreign currency exchange contract | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion) | 21,199 | 5,170 |
Derivatives designated as hedging instrument | Forward starting interest rate swaps | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion) | 1,842 | |
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Foreign currency transaction gains (losses) | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income on Derivatives | (180) | (1,236) |
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income on Derivatives | (409) | (29) |
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Costs of revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income on Derivatives | 111 | (13) |
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Selling, general and administrative expenses | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income on Derivatives | $ (17) | $ (17) |
Business Segment Information (D
Business Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Business Segment Information | |||||||||||
Consolidated revenue | $ 225,962 | $ 217,209 | $ 210,089 | $ 205,471 | $ 171,853 | $ 150,603 | $ 143,002 | $ 134,844 | $ 858,731 | $ 600,302 | $ 478,986 |
Consolidated long-lived assets, net | 388,340 | 383,552 | 388,340 | 383,552 | |||||||
North America | |||||||||||
Business Segment Information | |||||||||||
Consolidated revenue | 554,437 | 421,215 | 319,285 | ||||||||
Consolidated long-lived assets, net | 91,508 | 96,031 | 91,508 | 96,031 | |||||||
Asia | |||||||||||
Business Segment Information | |||||||||||
Consolidated long-lived assets, net | 280,771 | 268,636 | 280,771 | 268,636 | |||||||
Europe | |||||||||||
Business Segment Information | |||||||||||
Consolidated revenue | 196,516 | 134,639 | 129,904 | ||||||||
Other | |||||||||||
Business Segment Information | |||||||||||
Consolidated revenue | 107,778 | 44,448 | $ 29,797 | ||||||||
Europe and others | |||||||||||
Business Segment Information | |||||||||||
Consolidated long-lived assets, net | $ 16,061 | $ 18,885 | $ 16,061 | $ 18,885 |
Quarterly Results of Operatio96
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Quarterly Results of Operations (unaudited) | |||||||||||
Revenue | $ 225,962 | $ 217,209 | $ 210,089 | $ 205,471 | $ 171,853 | $ 150,603 | $ 143,002 | $ 134,844 | $ 858,731 | $ 600,302 | $ 478,986 |
Costs of revenue | 160,174 | 154,847 | 152,369 | 153,560 | 111,540 | 96,908 | 93,500 | 87,362 | 620,950 | 389,310 | 304,422 |
Gross profit | 65,788 | 62,362 | 57,720 | 51,911 | 60,313 | 53,695 | 49,502 | 47,482 | 237,781 | 210,992 | 174,564 |
Operating expenses | 55,564 | 55,904 | 54,183 | 53,759 | 54,793 | 39,561 | 36,246 | 35,072 | 219,410 | 165,672 | 121,996 |
Income from operations | 10,224 | 6,458 | 3,537 | (1,848) | 5,520 | 14,134 | 13,256 | 12,410 | 18,371 | 45,320 | 52,568 |
Other income (expense) | 5,485 | (2,331) | 1,418 | (4,125) | 7,476 | 1,653 | 1,830 | 1,390 | 447 | 12,349 | 4,832 |
Income before income tax expense | 15,709 | 4,127 | 4,955 | (5,973) | 12,996 | 15,787 | 15,086 | 13,800 | 18,818 | 57,669 | 57,400 |
Income tax expense (benefit) | 3,939 | (1,414) | 499 | (463) | 488 | 4,474 | 4,000 | 3,687 | 2,561 | 12,649 | 14,954 |
Net income | 11,770 | 5,541 | 4,456 | (5,510) | 12,508 | 11,313 | 11,086 | 10,113 | 16,257 | 45,020 | 42,446 |
Noncontrolling interest | 1,305 | 1,106 | 1,242 | 746 | 218 | 4,399 | 218 | ||||
Net income (loss) attributable to Virtusa common stockholders | $ 10,465 | $ 4,435 | $ 3,214 | $ (6,256) | $ 12,290 | $ 11,313 | $ 11,086 | $ 10,113 | $ 11,858 | $ 44,802 | $ 42,446 |
Basic earnings per share (in dollars per share) | $ 0.35 | $ 0.15 | $ 0.11 | $ (0.21) | $ 0.42 | $ 0.39 | $ 0.38 | $ 0.35 | $ 0.40 | $ 1.53 | $ 1.48 |
Diluted earnings per share (in dollars per share) | $ 0.34 | $ 0.15 | $ 0.11 | $ (0.21) | $ 0.41 | $ 0.38 | $ 0.37 | $ 0.34 | $ 0.39 | $ 1.49 | $ 1.44 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events. $ / shares in Units, € in Thousands, £ in Thousands, SEK in Thousands, $ in Thousands | May 03, 2017USD ($)$ / sharesshares | Apr. 20, 2017GBP (£)$ / £$ / € | Apr. 20, 2017SEK$ / £$ / € | Apr. 20, 2017EUR (€)$ / £$ / € | Apr. 20, 2017USD ($)$ / £$ / € |
Subsequent Events | |||||
Authorized amount of repurchase of common stock | $ 30,000 | ||||
Repayment of senior term loan | $ 81,000 | ||||
Orogen | Convertible preferred stock | |||||
Subsequent Events | |||||
Sale of convertible preferred stock (in shares) | shares | 108,000 | ||||
Shares issuable upon conversion (in shares) | shares | 3,000,000 | ||||
Aggregate purchase price | $ 108,000 | ||||
Conversion price (in dollars per share) | $ / shares | $ 36 | ||||
Dividend rate (as a percent) | 3.875% | ||||
Orogen | Non-voting convertible preferred stock | |||||
Subsequent Events | |||||
Preferred stock conversion ratio | 1 | ||||
Derivatives designated as hedging instrument | U.S. Dollar and U.K. Pound Sterling Forward Contract | |||||
Subsequent Events | |||||
Aggregate notional amount | £ 3,193 | $ 4,081 | |||
Weighted average settlement rate | $ / £ | 1.278 | 1.278 | 1.278 | 1.278 | |
Derivatives designated as hedging instrument | U.S. dollar and Swedish Krona ("SEK") Forward Contract | |||||
Subsequent Events | |||||
Aggregate notional amount | SEK 4,603 | $ 516 | |||
Weighted average settlement rate | 0.112 | 0.112 | 0.112 | 0.112 | |
Derivatives designated as hedging instrument | U.S. Dollar and Euro Forward Contract | |||||
Subsequent Events | |||||
Aggregate notional amount | € 290 | $ 311 | |||
Weighted average settlement rate | $ / € | 1.073 | 1.073 | 1.073 | 1.073 |
Schedule II-Valuation and Qua98
Schedule II-Valuation and Qualifying Accounts (Details) - Allowance For Doubtful Accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2015 | |
Valuation and Qualifying Accounts | |||
Balance at Beginning of Period | $ 1,046 | $ 881 | $ 1,130 |
Charged to Costs and Expenses | 1,015 | 208 | (134) |
Deductions/ Other | (256) | (43) | (115) |
Balance at End of Period | $ 1,805 | $ 1,046 | $ 881 |